Anyone read it yet, Joan?
QuoteApril 15, 2014 5:38 pm
'Capital in the Twenty-First Century', by Thomas Piketty
Review by Martin Wolf
An economic, social and political history of the evolution of income and wealth
Capital in the Twenty-First Century, by Thomas Piketty, translated by Thomas Goldhammer, Harvard University Press RRP£29.95/Belknap Press RRP$39.95, 696 pages
French economist Thomas Piketty has written an extraordinarily important book. Open-minded readers will surely find themselves unable to ignore the evidence and arguments he has brought to bear.
Capital in the Twenty-First Century contains four remarkable achievements. First, in its scale and sweep it brings us back to the founders of political economy. Piketty himself sees economics "as a subdiscipline of the social sciences, alongside history, sociology, anthropology, and political science". The result is a work of vast historical scope, grounded in exhaustive fact-based research, and suffused with literary references both normative and political. Piketty rejects theorising ungrounded in data. He also insists that social scientists "must make choices and take stands in regard to specific institutions and policies, whether it be the social state, the tax system, or the public debt".
Second, the book is built on a 15-year programme of empirical research conducted in conjunction with other scholars. Its result is a transformation of what we know about the evolution of income and wealth (which he calls capital) over the past three centuries in leading high-income countries. That makes it an enthralling economic, social and political history.
Among the lessons is that there is no general tendency towards greater economic equality. Another is that the relatively high degree of equality seen after the second world war was partly a result of deliberate policy, especially progressive taxation, but even more a result of the destruction of inherited wealth, particularly within Europe, between 1914 and 1945. A further lesson is that we are slowly recreating the "patrimonial capitalism" – the world dominated by inherited wealth – of the late 19th century.
Some argue that rising human capital will reduce the economic significance of other forms of wealth. But, notes Piketty, " 'nonhuman capital' seems almost as indispensable in the twenty-first century as it was in the eighteenth or nineteenth". Others argue that "class warfare" will give way to "generational warfare". But inequality within generations remains vastly greater than among them. Yet others suggest that intragenerational mobility robs rising inequality of earnings of significance, particularly in the US. This, too, is false: the rise in inequality of earnings in the US over recent decades is the same however long the period over which earnings are traced. High-school dropouts rarely become chairman of GE.
An important finding is that the ratio of wealth to income in Europe has climbed back above US levels, notably in France and the UK. Another is the notably big recent rise in the income shares of the top 1 per cent in English-speaking countries (above all, the US) since 1980. Perhaps the most extraordinary statistic is that "the richest 1 percent appropriated 60 percent of the increase in US national income between 1977 and 2007." Technology and globalisation can hardly explain this, since both were at work in all high-income countries. Indeed, the two most striking conclusions are the rise of the "supermanager" in the US and the return of patrimonial capitalism in Europe.
Third, Piketty uses simple economic models to explain what is going on. He notes, for example, that the huge rise in labour earnings at the top of US income distribution is overwhelmingly explained not by sports stars or entertainers but by increases in remuneration of managers. He argues that this is the result of the falls in marginal taxation, which have increased the incentive to bargain for higher pay, reinforced by changes in social norms. The alternative view – that the marginal productivity of top managers has exploded – is, he asserts, unpersuasive, partly because the marginal product of a manager is unmeasurable and partly because overall economic performance has not improved since the 1960s.
More interesting is Piketty's theory of capitalist accumulation. He argues that the ratio of capital to income will rise without limit so long as the rate of return is significantly higher than the economy's rate of growth. This, he holds, has normally been the case. The only exceptions from the past few centuries are when a sizeable part of the return on wealth is expropriated or destroyed, or when an economy has opportunities for exceptionally fast growth, as in postwar Europe or the emerging economies today.
This theory is built on two pieces of evidence. One is that the rate of return is only modestly affected by the ratio of capital to income. In the language of economists, the "elasticity of substitution" between capital and labour is far greater than one. In the long run, this seems plausible. Indeed, an age of robotics might further raise the elasticity.
The other is that, at least in normal times, capitalists save a sufficiently large share of their returns to ensure that their capital will grow at least as fast as the economy. This is especially likely to be true of the seriously wealthy, who are also likely to enjoy the highest returns. Small fortunes are eaten; big ones are not. The tendency for capital to grow faster than the economy is also more likely when the growth of the economy is relatively slow, either because of demographics or because technical progress is weak. Capital-dominated societies also have low-growth economies.
Fourth, Piketty makes bold and obviously "unrealistic" policy recommendations. In particular, he calls for a return to far higher marginal tax rates on top incomes and a progressive global wealth tax. The case for the latter is that the reported incomes of the richest are far smaller than their true economic incomes (the amount they can consume without reducing their wealth). The rich may even take themselves outside any fiscal jurisdiction, so enjoying the fiscal position of aristocrats of pre-revolutionary France. This fact blunts one of the criticisms of the book's reliance on pre-tax data: over time, the ability of individual countries to redistribute resources towards the middle and bottom of national income distributions might dwindle away to nothing.
Yet the book also has clear weaknesses. The most important is that it does not deal with why soaring inequality – while more than adequately demonstrated – matters. Essentially, Piketty simply assumes that it does.
One argument for inequality is that it is a spur to (or product of) innovation. The contrary evidence is clear: contemporary inequality and, above all, inherited wealth are unnecessary for this purpose. Another argument is that the product of just processes must be just. Yet even if the processes driving inequality were themselves just (which is doubtful), this is not the only principle of distributive justice. Another – to me more plausible – argument against Piketty's is that inequality is less important in an economy that is now 20 times as productive as those of two centuries ago: even the poor enjoy goods and services unavailable to the richest a few decades ago.
For me the most convincing argument against the ongoing rise in economic inequality is that it is incompatible with true equality as citizens. If, as the ancient Athenians believed, participation in public life is a fundamental aspect of human self-realisation, huge inequalities cannot but destroy it. In a society dominated by wealth, money will buy power. Inequality cannot be eliminated. It is inevitable and to a degree even desirable. But, as the Greeks argued, there needs to be moderation in all things. We are not seeing moderate rises in inequality. We should take notice.
Martin Wolf is the FT's chief economics commentator
And from the Economist:
QuoteAll men are created unequal
Revisiting an old argument about the impact of capitalism
Jan 4th 2014 | From the print edition
Timekeeper
INEQUALITY is one of the most controversial attributes of capitalism. Early in the industrial revolution stagnant wages and concentrated wealth led David Ricardo and Karl Marx to question capitalism's sustainability. Twentieth-century economists lost interest in distributional issues amid the "Great Compression" that followed the second world war. But a modern surge in inequality has new economists wondering, as Marx and Ricardo did, which forces may be stopping the fruits of capitalism from being more widely distributed.
"Capital in the Twenty-First Century" by Thomas Piketty, an economist at the Paris School of Economics, is an authoritative guide to the question. Mr Piketty's book, which was published in French in 2013 and will be released in English in March 2014, self-consciously builds on the work of 19th-century thinkers; his title is an allusion to Marx's magnum opus. But he possesses an advantage they lacked: two centuries' worth of hard data.
The book suggests that some 20th-century conventional wisdom was badly wrong. Inequality does not appear to ebb as economies mature, as Simon Kuznets, a Nobel-winning economist, argued in the 1950s. Neither should we expect the share of income flowing to capital to stay roughly constant over time: what another economist, Nicholas Kaldor, labelled a key fact of economic growth. Mr Piketty argues there is no reason to think that capitalism will "naturally" reverse rising inequality.
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fcdn.static-economist.com%2Fsites%2Fdefault%2Ffiles%2Fimagecache%2Foriginal-size%2Fimages%2Fprint-edition%2F20140104_FNC089.png&hash=e2f0f18c43f9151ae8c5b1e1f93badd0766e6a34)
The centrepiece of Mr Piketty's analysis is the ratio of an economy's capital (or equivalently, its wealth) to its annual output. From 1700 until the first world war, the stock of wealth in Western Europe hovered at around 700% of national income. Over time the composition of wealth changed; agricultural land declined in importance while industrial capital—factories, machinery and intellectual property—gained prominence. Yet wealth held steady at a high level (see chart, first panel).
Pre-1914 economies were very unequal. In 1910 the top 10% of European households controlled almost 90% of all wealth. The flow of rents and dividends from capital contributed to high inequality of income; the top 10% captured more than 45% of all income. Mr Piketty's work suggests there was little sign of any natural decline in inequality on the outbreak of the first world war.
The wars and depressions between 1914 and 1950 dragged the wealthy back to earth. Wars brought physical destruction of capital, nationalisation, taxation and inflation, while the Great Depression destroyed fortunes through capital losses and bankruptcy. Yet capital has been rebuilt, and the owners of capital have prospered once more. From the 1970s the ratio of wealth to income has grown along with income inequality, and levels of wealth concentration are approaching those of the pre-war era.
Mr Piketty describes these trends through what he calls two "fundamental laws of capitalism". The first explains variations in capital's share of income (as opposed to the share going to wages). It is a simple accounting identity: at all times, capital's share is equal to the rate of return on capital multiplied by the total stock of wealth as a share of GDP. The rate of return is the sum of all income flowing to capital—rents, dividends and profits—as a percentage of the value of all capital.
The second law is more a rough rule of thumb: over long periods and under the right circumstances the stock of capital, as a percentage of national income, should approach the ratio of the national-savings rate to the economic growth rate. With a savings rate of 8% (roughly that of the American economy) and GDP growth of 2%, wealth should rise to 400% of annual output, for example, while a drop in long-run growth to 1% would push up expected wealth to 800% of GDP. Whether this is a "law" or not, the important point is that a lower growth rate is conducive to higher concentrations of wealth.
In Mr Piketty's narrative, rapid growth—from large productivity gains or a growing population—is a force for economic convergence. Prior wealth casts less of an economic and political shadow over the new income generated each year. And population growth is a critical component of economic growth, accounting for about half of average global GDP growth between 1700 and 2012. America's breakneck population and GDP growth in the 19th century eroded the power of old fortunes while throwing up a steady supply of new ones.
Victorian values
Tumbling rates of population growth are pushing wealth concentrations back toward Victorian levels, in Mr Piketty's estimation. The ratio of wealth to income is highest among demographically challenged economies such as Italy and Japan (although both countries have managed to mitigate inequality through redistributive taxes and transfers). Interestingly, Mr Piketty reckons this world, in which the return to capital is persistently higher than growth, is the more "normal" state. In that case, wealth piles up faster than growth in output or incomes. The mid-20th century, when wealth compression combined with extraordinary growth to generate an egalitarian interregnum, was the exception.
Sustained rates of return above the rate of growth may sound unrealistic. The more capital there is, the lower the return should be: the millionth industrial robot adds less to production than the hundredth. Yet somewhat surprisingly, the rate of return on capital is remarkably constant over long periods (see chart, second panel). Technology is partly responsible. Innovation, and growth in output per person, creates investment opportunities even when shrinking populations reduce GDP growth to near zero.
New technology can also make it easier to substitute machines for human workers. That allows capital to gobble up a larger share of national income, raising its return. Amid a new burst of automation, wealth concentrations and inequality could reach unprecedented heights, putting a modern twist on a very 19th- century problem.
Edit: And from the Economist's blogs:
http://www.economist.com/blogs/freeexchange/2014/01/inequality
QuoteWhat Mr Piketty conveys most powerfully, in my opinion, is the fact that economics was once centrally concerned with the question of distribution. It was impossible to ignore in the 19th century! Not least because economists of a market-oriented disposition and those more sympathetic to Marx both wondered whether capitalism was capable of generating a sustainable distribution of the gains from growth. We are all used to sneering at communism because of its manifest failure to deliver the sustained rates of growth managed by market economies. But Marx's original critique of capitalism was not that it made for lousy growth rates. It was that a rising concentration of wealth couldn't be sustained politically. Ultimately, those of us who would like to preserve the market system need to grapple with that sort of dynamic, in the context of the worrying numbers on inequality that Mr Piketty presents.
Prediction: it's a great work of economics that will change nothing.
Quote from: Sheilbh on April 15, 2014, 05:36:09 PM
Anyone read it yet, Joan?
QuoteApril 15, 2014 5:38 pm
'Capital in the Twenty-First Century', by Thomas Piketty
Review by Martin Wolf
An economic, social and political history of the evolution of income and wealth
Capital in the Twenty-First Century, by Thomas Piketty, translated by Thomas Goldhammer, Harvard University Press RRP£29.95/Belknap Press RRP$39.95, 696 pages
:lmfao: no
Quote from: 11B4V on April 15, 2014, 06:32:22 PM
Quote from: Sheilbh on April 15, 2014, 05:36:09 PM
Anyone read it yet, Joan?
QuoteApril 15, 2014 5:38 pm
'Capital in the Twenty-First Century', by Thomas Piketty
Review by Martin Wolf
An economic, social and political history of the evolution of income and wealth
Capital in the Twenty-First Century, by Thomas Piketty, translated by Thomas Goldhammer, Harvard University Press RRP£29.95/Belknap Press RRP$39.95, 696 pages
:lmfao: no
Not enough Tiger Tanks for 11Sturmfuhrer.
QuotePerhaps the most extraordinary statistic is that "the richest 1 percent appropriated 60 percent of the increase in US national income between 1977 and 2007."
"Appropriated??"
Doesn't Martin Wolf write for the FT? That's not very FT like language.
Quote from: Admiral Yi on April 15, 2014, 06:40:34 PM
QuotePerhaps the most extraordinary statistic is that "the richest 1 percent appropriated 60 percent of the increase in US national income between 1977 and 2007."
"Appropriated??"
Doesn't Martin Wolf write for the FT? That's not very FT like language.
But it's what happened.
What do you think the word means mongers?
I think "appropriated" is fairly neutral. However, it has a resonance with "expropriated," which is much more politically-inflected. But then "earned" would have been equally politically-inflected. Would "accumulated" work best ("best" being defined most descriptive without signalling a particular politics)?
On the macro-topic, I skimmed a critique of the book by Doug Henwood (Left Business Observer), but honestly didn't grasp all that much.
Quote from: Admiral Yi on April 15, 2014, 06:40:34 PM
QuotePerhaps the most extraordinary statistic is that "the richest 1 percent appropriated 60 percent of the increase in US national income between 1977 and 2007."
"Appropriated??"
Doesn't Martin Wolf write for the FT? That's not very FT like language.
He is chief economics commentator at the FT, here writing for the FT. He's also using direct quotation :P
Quote from: Sheilbh on April 15, 2014, 07:43:44 PM
He's also using direct quotation :P
My bad. I missed that.
Quote from: Capetan Mihali on April 15, 2014, 07:40:01 PM
I think "appropriated" is fairly neutral. However, it has a resonance with "expropriated," which is much more politically-inflected. But then "earned" would have been equally politically-inflected. Would "accumulated" work best ("best" being defined most descriptive without signalling a particular politics)?
How much income did you appropriate last year Capetano?
(Accumulated doesn't work because you accumulate stocks and income is a flow.)
Quote from: Admiral Yi on April 15, 2014, 07:51:51 PM
Quote from: Capetan Mihali on April 15, 2014, 07:40:01 PM
I think "appropriated" is fairly neutral. However, it has a resonance with "expropriated," which is much more politically-inflected. But then "earned" would have been equally politically-inflected. Would "accumulated" work best ("best" being defined most descriptive without signalling a particular politics)?
How much income did you appropriate last year Capetano?
(Accumulated doesn't work because you accumulate stocks and income is a flow.)
How much of the national income, as the quote has it? I'm not sure.
What term would you use, barring "earned"?
Quote from: Capetan Mihali on April 15, 2014, 07:57:13 PM
How much of the national income, as the quote has it? I'm not sure.
Or a dollar amount.
QuoteWhat term would you use, barring "earned"?
Received, gained.
Quote from: 11B4V on April 15, 2014, 06:32:22 PM
Quote from: Sheilbh on April 15, 2014, 05:36:09 PM
Anyone read it yet, Joan?
QuoteApril 15, 2014 5:38 pm
'Capital in the Twenty-First Century', by Thomas Piketty
Review by Martin Wolf
An economic, social and political history of the evolution of income and wealth
Capital in the Twenty-First Century, by Thomas Piketty, translated by Thomas Goldhammer, Harvard University Press RRP£29.95/Belknap Press RRP$39.95, 696 pages
:lmfao: no
I guess ignorance truly is bliss. I mean, 11Cool4J here is having a riot.
Quote from: Admiral Yi on April 15, 2014, 08:02:00 PM
Received, gained.
Rather passive verbs, no? Who did they receive or gain it from?
Quote from: Razgovory on April 15, 2014, 08:02:24 PM
I guess ignorance truly is bliss. I mean, 11Cool4J here is having a riot.
His mama said knock you out.
Quote from: Sheilbh on April 15, 2014, 08:03:20 PM
Rather passive verbs, no? Who did they receive or gain it from?
What difference does it make who they received it from?
Quote from: Admiral Yi on April 15, 2014, 08:07:51 PM
What difference does it make who they received it from?
Style. Neither of those words work in the sentence because they leave you wondering.
Quote from: Admiral Yi on April 15, 2014, 08:02:00 PM
Quote from: Capetan Mihali on April 15, 2014, 07:57:13 PM
How much of the national income, as the quote has it? I'm not sure.
Or a dollar amount.
Well, that would work for my personal income, but not really for the "percent of the increase in US national income between 1977 and 2007."
I wouldn't mind telling you my own dollar amount, but it seems a little peripheral to what we're discussing; "gained, "received," even "earned" would serve fine for my, and most of our, individual incomes but not as well for the increase-in-share-of-total that was at issue.
Quote from: Sheilbh on April 15, 2014, 08:21:55 PM
Style. Neither of those words work in the sentence because they leave you wondering.
And with the use of "appropriate" your curiosity is quenched?
I'm not following your logic.
No, I want to read the 700 page book to see the point this objectionable sentence is making :P
My point is purely stylistic. They're more passive verbs. Appropriated, earned and accumulated work. They are things the richest 1% did to the increase of US national income. Could you really write 'the richest 1% received 60% of the increase of US national income' without leaving the reader wondering, who gave it to them and why?
Part of the Introduction to the book, for those who are interested. (http://www.hup.harvard.edu/features/capital-in-the-twenty-first-century-introduction.html)
Looks really interesting. I may pick it up in the summer. :bowler:
Quote from: Capetan Mihali on April 15, 2014, 08:24:35 PM
Quote from: Admiral Yi on April 15, 2014, 08:02:00 PM
Quote from: Capetan Mihali on April 15, 2014, 07:57:13 PM
How much of the national income, as the quote has it? I'm not sure.
Or a dollar amount.
Well, that would work for my personal income, but not really for the "percent of the increase in US national income between 1977 and 2007."
I wouldn't mind telling you my own dollar amount, but it seems a little peripheral to what we're discussing; "gained, "received," even "earned" would serve fine for my, and most of our, individual incomes but not as well for the increase-in-share-of-total that was at issue.
Definitely appropriated. You were paid by the Vermont Treasury, after all. THINK ON YOUR SINS.
Quote from: Sheilbh on April 15, 2014, 08:38:19 PM
No, I want to read the 700 page book to see the point this objectionable sentence is making :P
My point is purely stylistic. They're more passive verbs. Appropriated, earned and accumulated work. They are things the richest 1% did to the increase of US national income. Could you really write 'the richest 1% received 60% of the increase of US national income' without leaving the reader wondering, who gave it to them and why?
"Received" would suck. "Accumulated" is fine and, yes, neutral.
Though I doubt courting neutrality is the highest concern for a guy who titled his book "Capital."
http://www.huffingtonpost.com/2014/04/15/government-wealthy-study_n_5154879.html?ncid=fcbklnkushpmg00000013
QuoteU.S. government policies reflect the desires of the wealthy and interest groups more than the average citizen, according to researchers at Princeton University and Northwestern University.
"[W]e believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America's claims to being a democratic society are seriously threatened," write Martin Gilens and Benjamin I. Page in an April 9 article posted on the Princeton website and scheduled for fall publication in the journal Perspectives on Politics.
Gilens and Page analyzed 1,779 policy issues from 1981 to 2002 and compared changes to the preferences of median-income Americans, the top-earning 10 percent, and organized interest groups and industries.
"Not only do ordinary citizens not have uniquely substantial power over policy decisions; they have little or no independent influence on policy at all," the researchers write in the article titled, "Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens."
:shutup: :sleep:
Quote from: Sheilbh on April 15, 2014, 08:38:19 PM
No, I want to read the 700 page book to see the point this objectionable sentence is making :P
Which is, presumably, the exact same thing that would happen if he had written "earned" instead of "appropriated." :mellow:
I can tell you already without having read the book what point he is aiming for: he wants to create the implication that those gains in income were ill-gotten, without having to defend an actual case for law breaking.
I'm also pretty sure that if he gets around to it, that that 60% of increase in income is a function of assets held ("hoarded?") and the bull market we just experienced.
I am always suspicious that the talk about inequality is politically motivated. What I would be more interested about is the quality of life of the given "classes" or "stratas".
What I mean is: if income inequality has risen in the last, say, 30 years, while the living standards of the people on the lower (or really, any) end of it decreased, then it is clearly a case of concern. If, however, income inequality has risen while standard of living has also risen for everybody, then frankly the whole inequality part is largely a non issue, and a byproduct only jealous people care about.
Also, does the summary basically says that the European welfare states we have been maintaining via accumulating great debt are the exception to the general economic happens and not the norm? And maybe that means we should not wreck ourselves trying to maintain them at current levels?
Quote from: Tamas on April 16, 2014, 08:21:04 AM
What I mean is: if income inequality has risen in the last, say, 30 years, while the living standards of the people on the lower (or really, any) end of it decreased, then it is clearly a case of concern. If, however, income inequality has risen while standard of living has also risen for everybody, then frankly the whole inequality part is largely a non issue, and a byproduct only jealous people care about.
I think it is damaging here because of its political and social impacts, not because I am concerned people are starving in the streets.
Quote from: Tamas on April 16, 2014, 08:21:04 AM
I am always suspicious that the talk about inequality is politically motivated.
Of course it is. Why wouldn't it be, given that the only possible solutions to economic problems are fundamentally political in nature? :unsure:
QuoteWhat I mean is: if income inequality has risen in the last, say, 30 years, while the living standards of the people on the lower (or really, any) end of it decreased, then it is clearly a case of concern.
"Concern" sounds a little too political.
QuoteIf, however, income inequality has risen while standard of living has also risen for everybody, then frankly the whole inequality part is largely a non issue, and a byproduct only jealous people care about.
Sure, I guess we could ust ignore human nature. That's worked out great in the past.
Dependent upon your metric (the "ability to achieve economic stability as a householder" approach vs. the "POORS HAVE SMARTPHONES!" approach), standard of living has decreased. It's also not at all clear that inequality, which may have a role in reducing aggregate demand, doesn't have a serious impact on growth, employment, etc.
Quote from: Valmy on April 16, 2014, 08:29:22 AM
Quote from: Tamas on April 16, 2014, 08:21:04 AM
What I mean is: if income inequality has risen in the last, say, 30 years, while the living standards of the people on the lower (or really, any) end of it decreased, then it is clearly a case of concern. If, however, income inequality has risen while standard of living has also risen for everybody, then frankly the whole inequality part is largely a non issue, and a byproduct only jealous people care about.
I think it is damaging here because of its political and social impacts, not because I am concerned people are starving in the streets.
There's probably an area worth exploring between "everything is fine, maybe even better than ever!" and "people are literally unable to meet the nutritional requirements for continued life."
Quote from: Tamas on April 16, 2014, 08:21:04 AM
I am always suspicious that the talk about inequality is politically motivated. What I would be more interested about is the quality of life of the given "classes" or "stratas".
What I mean is: if income inequality has risen in the last, say, 30 years, while the living standards of the people on the lower (or really, any) end of it decreased, then it is clearly a case of concern. If, however, income inequality has risen while standard of living has also risen for everybody, then frankly the whole inequality part is largely a non issue, and a byproduct only jealous people care about.
First of all his point is that inequality in the last thirty years is actually just returning to the historical mean that was disrupted by two world wars which is more problematic than it just rising in general.
Secondly you're right if we think globally. But I'm not convinced that that matters (though it's generally important and great news) because I don't think measures to reduced inequality in, say, the UK will necessarily lead to lower growth in the rest of the world. We should try and avoid a return to patrimonial capitalism which is what Piketty argues has returned in Europe.
Thirdly I think the Economist makes this point on one of the blogs but inequality is rising within emerging markets (I believe Brazil's an exception). In addition Piketty's data goes against the idea that as an economy matures inequality grows and then begins to shrink. So the threat to globalisation and development could actually come from those developing countries - and we've seen examples of rage and populism in Brazil, India and China in recent years.
I didn't know he'd came up with the idea but my view was always Kuznetsian that as an economy matures inequality increases (the 19th century) but then begins to decrease. Which is a cheerful and Whiggish view to have. Piketty's data, from my understanding, undermines that view entirely. Which leaves me somewhere, but I'm not quite sure where yet.
Quote from: Valmy on April 16, 2014, 08:29:22 AM
I think it is damaging here because of its political and social impacts, not because I am concerned people are starving in the streets.
Exactly. If he's right and 19th century distribution is the norm to which we're returning then that'll have serious political and social effects all over the world. As the Economist blog put it:
QuoteWhat Mr Piketty conveys most powerfully, in my opinion, is the fact that economics was once centrally concerned with the question of distribution. It was impossible to ignore in the 19th century! Not least because economists of a market-oriented disposition and those more sympathetic to Marx both wondered whether capitalism was capable of generating a sustainable distribution of the gains from growth. We are all used to sneering at communism because of its manifest failure to deliver the sustained rates of growth managed by market economies. But Marx's original critique of capitalism was not that it made for lousy growth rates. It was that a rising concentration of wealth couldn't be sustained politically. Ultimately, those of us who would like to preserve the market system need to grapple with that sort of dynamic, in the context of the worrying numbers on inequality that Mr Piketty presents.
Quote from: Ideologue on April 16, 2014, 08:47:30 AM
Sure, I guess we could ust ignore human nature. That's worked out great in the past.
It is quite rich from a communist to want human nature dictate economics. I mean, I fully agree with you on that one. Laisez faire capitalism does, too.
Quote from: SheilbhWhich leaves me somewhere, but I'm not quite sure where yet.
Digging a new moat?
Quote from: Sheilbh on April 16, 2014, 08:57:49 AM
Quote from: Valmy on April 16, 2014, 08:29:22 AM
I think it is damaging here because of its political and social impacts, not because I am concerned people are starving in the streets.
Exactly. If he's right and 19th century distribution is the norm to which we're returning then that'll have serious political and social effects all over the world. As the Economist blog put it:
QuoteWhat Mr Piketty conveys most powerfully, in my opinion, is the fact that economics was once centrally concerned with the question of distribution. It was impossible to ignore in the 19th century! Not least because economists of a market-oriented disposition and those more sympathetic to Marx both wondered whether capitalism was capable of generating a sustainable distribution of the gains from growth. We are all used to sneering at communism because of its manifest failure to deliver the sustained rates of growth managed by market economies. But Marx's original critique of capitalism was not that it made for lousy growth rates. It was that a rising concentration of wealth couldn't be sustained politically. Ultimately, those of us who would like to preserve the market system need to grapple with that sort of dynamic, in the context of the worrying numbers on inequality that Mr Piketty presents.
On the other hand, isn't a healthy degree of wealth concentration is simply necessary for economic growth and suitably sized private initiative in industry and the like? I really don't know, I am just asking.
Quote from: Tamas on April 16, 2014, 08:58:38 AM
Quote from: Ideologue on April 16, 2014, 08:47:30 AM
Sure, I guess we could ust ignore human nature. That's worked out great in the past.
It is quite rich from a communist to want human nature dictate economics. I mean, I fully agree with you on that one. Laisez faire capitalism does, too.
"Jealousy" is the reason a concept of fairness even exists. It's a real mistake for any society to abandon a commitment to fairness, which requires prosperity and stability for a majority of the unexceptional people who comprise any society, with a broad equality of outcome for most (as well as a broad equality of that nebulous "opportunity"). The inevitable alternatives to this middle class society are instability or militarization (or both).
Unfortunately, short of a radical reorganization of the economic and political structures of the West, instability, militarization, or both are the most likely results given that, as Piketty seems to say, only about 1% of recorded history suggests anything else is even possible.
QuoteThomas Piketty wrote:
To avoid any misunderstanding, let me say that Kuznets's work in establishing the first US national accounts data and the first historical series of inequality measures was of the utmost importance, and it is clear from reading his books (as opposed to his papers) that he shared the true scientific ethic. In addition, the high growth rates observed in all the developed countries in the post–World War II period were a phenomenon of great significance, as was the still more significant fact that all social groups shared in the fruits of growth. It is quite understandable that the Trente Glorieuses fostered a certain degree of optimism and that the apocalyptic predictions of the nineteenth century concerning the distribution of wealth forfeited some of their popularity.
Nevertheless, the magical Kuznets curve theory was formulated in large part for the wrong reasons, and its empirical underpinnings were extremely fragile. The sharp reduction in income inequality that we observe in almost all the rich countries between 1914 and 1945 was due above all to the world wars and the violent economic and political shocks they entailed (especially for people with large fortunes). It had little to do with the tranquil process of intersectoral mobility described by Kuznets.
If this is true, and it almost certainly is, what does that imply for our future? Will inequality continue to increase, potentially to 19th century levels or worse, until massive external shocks like a huge economic crisis (like the one that just happened :hmm:) or world war (like the one that will happen soon :o) reduce levels of inequality much like they did a hundred years ago?
Also, what level of inequality is "too much?" How do we know we have too much inequality? People starving in the streets and storming the Bastille is obvious, but realistically how do rich countries recognize how much is too much?
Quote from: FunkMonk on April 16, 2014, 09:39:28 AM
QuoteThomas Piketty wrote:
To avoid any misunderstanding, let me say that Kuznets's work in establishing the first US national accounts data and the first historical series of inequality measures was of the utmost importance, and it is clear from reading his books (as opposed to his papers) that he shared the true scientific ethic. In addition, the high growth rates observed in all the developed countries in the post–World War II period were a phenomenon of great significance, as was the still more significant fact that all social groups shared in the fruits of growth. It is quite understandable that the Trente Glorieuses fostered a certain degree of optimism and that the apocalyptic predictions of the nineteenth century concerning the distribution of wealth forfeited some of their popularity.
Nevertheless, the magical Kuznets curve theory was formulated in large part for the wrong reasons, and its empirical underpinnings were extremely fragile. The sharp reduction in income inequality that we observe in almost all the rich countries between 1914 and 1945 was due above all to the world wars and the violent economic and political shocks they entailed (especially for people with large fortunes). It had little to do with the tranquil process of intersectoral mobility described by Kuznets.
If this is true, and it almost certainly is, what does that imply for our future? Will inequality continue to increase, potentially to 19th century levels or worse, until massive external shocks like a huge economic crisis (like the one that just happened :hmm:) or world war (like the one that will happen soon :o) reduce levels of inequality much like they did a hundred years ago?
Also, what level of inequality is "too much?" How do we know we have too much inequality? People starving in the streets and storming the Bastille is obvious, but realistically how do rich countries recognize how much is too much?
Well according to Ide, if one bloke is envious of an other bloke's wealth, that is too much inequality.
Quote from: Ideologue on April 16, 2014, 09:17:32 AM
Quote from: Tamas on April 16, 2014, 08:58:38 AM
Quote from: Ideologue on April 16, 2014, 08:47:30 AM
Sure, I guess we could ust ignore human nature. That's worked out great in the past.
It is quite rich from a communist to want human nature dictate economics. I mean, I fully agree with you on that one. Laisez faire capitalism does, too.
"Jealousy" is the reason a concept of fairness even exists. It's a real mistake for any society to abandon a commitment to fairness, which requires prosperity and stability for a majority of the unexceptional people who comprise any society, with a broad equality of outcome for most (as well as a broad equality of that nebulous "opportunity"). The inevitable alternatives to this middle class society are instability or militarization (or both).
Unfortunately, short of a radical reorganization of the economic and political structures of the West, instability, militarization, or both are the most likely results given that, as Piketty seems to say, only about 1% of recorded history suggests anything else is even possible.
Well fairness is easily abandoned also when the middle class is being squeezed dry so that the unrealistic perks to the poor and the rich can be maintained.
And I am not sure how much prosperity a society is mandated to guarantee to it's citizens. Stability? Sure. A middle class lifestyle guaranteed through welfare? No.
Quote from: Tamas on April 16, 2014, 08:21:04 AM
I am always suspicious that the talk about inequality is politically motivated.
The review specifically states that the author is explicitly staking out a political position, so I'm not sure why you'd be suspicious about it. The review further goes on to say that the author takes increasing inequality to be undesirable as axiomatic.
If, as I suspect, you disagree with that axiom it, it would seem that you have the choice of rejecting the guy's argument and research outright, or engaging with it though you know you have that point of disagreement. What the reviewer says the author is conveying is evidence that the lower levels of inequality in the period 1945-1990 (or so) is a historical aberration, that it's a result of both deliberate policy choices and of historical events (the outcome of the two world wars), and that we are headed for a distribution of wealth more similar to that in the so-called 'gilded age' of the 1920s and 30s.
Now, you may think that those facts are wrong, but then your counterargument can't stand on "it's ideologically motivated", you'd have to engage on his actual facts and analysis to be credible. Alternately, I suppose you can accept the fact and argue that it's not a big deal.
Of course, the second option leads to Norgy's posting of the Princeton study that shows that political decision-making is increasingly controlled by the wealthiest elites and non-responsive to the opinions and needs of the less-wealthy majority.
This, of course, is ultimately (and initially, actually) a very political discussion. Personally, I'd prefer to try to keep it less about tone and slogan, and more about substance.
What this book and the Princeton study (and other things beside) does is that it makes Marx's arguments more credible than it's been fashionable for a while to think (including for me); and I don't mean about how redistributive Communism is better than Capitalism (and much of that is down to Lenin anyhow), but about how the tendency of Capital to accumulate a greater and greater portion of the wealth and decision-making power and how that will lead to increasing social conflict. In other words, Marx's conclusion of the inevitability of class conflict seems more apt now than it has for a while based on the facts presented.
How we as societies respond to that is of course very much up for discussion, and that discussion is clearly very political too.
Though
Quote from: Sheilbh on April 16, 2014, 08:53:17 AM
Thirdly I think the Economist makes this point on one of the blogs but inequality is rising within emerging markets (I believe Brazil's an exception). In addition Piketty's data goes against the idea that as an economy matures inequality grows and then begins to shrink. So the threat to globalisation and development could actually come from those developing countries - and we've seen examples of rage and populism in Brazil, India and China in recent years.
This certainly matches my anecdotal observations in China.
QuoteI didn't know he'd came up with the idea but my view was always Kuznetsian that as an economy matures inequality increases (the 19th century) but then begins to decrease. Which is a cheerful and Whiggish view to have. Piketty's data, from my understanding, undermines that view entirely. Which leaves me somewhere, but I'm not quite sure where yet.
Yeah, that's what makes this both new and interesting to me. I - and I think this was close to a broad Western consensus - had settled into a comfortable view that things was broadly getting better for everyone and we were experiencing a slow steady movement towards less economically derived social tension.
There are some convincing arguments being made and data being shown that suggests that this was wrong; and that leads to a very interesting "what now?"
Quote from: Tamas on April 16, 2014, 08:58:38 AM
It is quite rich from a communist to want human nature dictate economics. I mean, I fully agree with you on that one. Laisez faire capitalism does, too.
The thing is, the Communist systems - fundamentally flawed as they are - and the revolutions that put them into place, are very much a result of basic human nature as well.
The resentment that comes from large groups of people feeling they are not well off, especially if it looks like things are getting worse for them not better, is very real and leads to conflict in a number of ways, no matter how nice it would be to dismiss such resentment as "unworthy".
It is human nature to struggle to improve your lot in life. The success of Western Capitalism is in my view predicated on making acting within the lawful economy the best venue for material improvement for the broad masses of the population. If acting within the lawful economy (through working or investment even with limited means) does not lead to improvement for the majority of the population then it will increasingly seek out other strategies to reach that goal including crime and/or embracing class struggle.
Quote from: Admiral Yi on April 16, 2014, 07:17:08 AM
Quote from: Sheilbh on April 15, 2014, 08:38:19 PM
No, I want to read the 700 page book to see the point this objectionable sentence is making :P
Which is, presumably, the exact same thing that would happen if he had written "earned" instead of "appropriated." :mellow:
I can tell you already without having read the book what point he is aiming for: he wants to create the implication that those gains in income were ill-gotten, without having to defend an actual case for law breaking.
I'm also pretty sure that if he gets around to it, that that 60% of increase in income is a function of assets held ("hoarded?") and the bull market we just experienced.
So presumably you wish give the implication that these gains were fairly won?
Quote from: Tamas on April 16, 2014, 09:00:42 AM
On the other hand, isn't a healthy degree of wealth concentration is simply necessary for economic growth and suitably sized private initiative in industry and the like? I really don't know, I am just asking.
Well, of course a healthy degree of wealth concentration is necessary. I think the argument is that we're moving away from a healthy degree of concentration and towards an unhealthy one.
Quote from: Jacob on April 16, 2014, 09:47:37 AM
Of course, the second option leads to Norgy's posting of the Princeton study that shows that political decision-making is increasingly controlled by the wealthiest elites and non-responsive to the opinions and needs of the less-wealthy majority.
Fair enough.
I think, and I have been saying here for a while now that the kind of setup we have in the first world (I guess it could be called corporatism) (most notably in the US I guess, in the EU it is more hidden, and in symbiosis, with the bureaucratic weight on everything), is actually mainly a tool in the hands of the ruling class, and what all the regulations and welfare spending primarily achieves is the strengthening of the "aristocracy's" position, by discouraging more free market circumstances, as well as redistributing wealth in a manner that not only pacifies the poor, but also hides underlying long term problems with the system, as well as stops most "challengers" to emerge from the middle class.
Quote from: FunkMonk on April 16, 2014, 09:39:28 AM
If this is true, and it almost certainly is, what does that imply for our future? Will inequality continue to increase, potentially to 19th century levels or worse, until massive external shocks like a huge economic crisis (like the one that just happened :hmm:) or world war (like the one that will happen soon :o) reduce levels of inequality much like they did a hundred years ago?
Yeah, that's why this brings up a number of very interesting implications.
QuoteAlso, what level of inequality is "too much?" How do we know we have too much inequality? People starving in the streets and storming the Bastille is obvious, but realistically how do rich countries recognize how much is too much?
I think, unfortunately, that this is only obvious in retrospect.
Quote from: Tamas on April 16, 2014, 10:06:42 AM
Quote from: Jacob on April 16, 2014, 09:47:37 AM
Of course, the second option leads to Norgy's posting of the Princeton study that shows that political decision-making is increasingly controlled by the wealthiest elites and non-responsive to the opinions and needs of the less-wealthy majority.
Fair enough.
I think, and I have been saying here for a while now that the kind of setup we have in the first world (I guess it could be called corporatism) (most notably in the US I guess, in the EU it is more hidden, and in symbiosis, with the bureaucratic weight on everything), is actually mainly a tool in the hands of the ruling class, and what all the regulations and welfare spending primarily achieves is the strengthening of the "aristocracy's" position, by discouraging more free market circumstances, as well as redistributing wealth in a manner that not only pacifies the poor, but also hides underlying long term problems with the system, as well as stops most "challengers" to emerge from the middle class.
So
So what would you have instead?
Quote from: Tamas on April 16, 2014, 10:06:42 AM
Fair enough.
I think, and I have been saying here for a while now that the kind of setup we have in the first world (I guess it could be called corporatism) (most notably in the US I guess, in the EU it is more hidden, and in symbiosis, with the bureaucratic weight on everything), is actually mainly a tool in the hands of the ruling class, and what all the regulations and welfare spending primarily achieves is the strengthening of the "aristocracy's" position, by discouraging more free market circumstances, as well as redistributing wealth in a manner that not only pacifies the poor, but also hides underlying long term problems with the system, as well as stops most "challengers" to emerge from the middle class.
We draw almost diametrically opposite conclusions.
To me - and I look at the Scandinavian model here - a rational system of redistribution and regulation is the best guarantor of relative social equality and allows people from lower economic strata the best chances to improve their position.
A lack of regulation and redistributive policies allow those with greater economic power to use it to entrench their position and make movement more difficult, and generally leads to clientism.
I believe the data bears me out on that too.
That said, I have no doubt that a poorly thought out set of regulations and redistribution can be captured by the elite economic classes and wielded for their own benefit to entrench their position. I just think that's more characteristic of the post-communist states in the East rather than the EU; I think that an argument can possibly be made that there's a trend towards that in the US as well. But I don't think the answer there is to do away with regulation and redistribution, but rather to reform and rationalize it (while acknowledging that that may be impossible politically).
Quote from: Tamas on April 16, 2014, 10:06:42 AM
I think, and I have been saying here for a while now that the kind of setup we have in the first world (I guess it could be called corporatism) (most notably in the US I guess, in the EU it is more hidden, and in symbiosis, with the bureaucratic weight on everything), is actually mainly a tool in the hands of the ruling class, and what all the regulations and welfare spending primarily achieves is the strengthening of the "aristocracy's" position, by discouraging more free market circumstances, as well as redistributing wealth in a manner that not only pacifies the poor, but also hides underlying long term problems with the system, as well as stops most "challengers" to emerge from the middle class.
I don't agree with your point about the welfare state but I think there's a lot to this - see the attempts to crush e-cigarettes with regulation. I believe Piketty says that patrimonial capitalism is back at least in Europe, that we're returning to inherited capitalist wealth and rentiers - though we're probably not there yet.
But I agree a lot about the rest. I think there are companies behaving like they're in the ancien regime now. They negotiate their tax bills. They're monopolistic and anti-competitive. And very often they're in the tech world so they get a round of applause from everyone for doing it.
Quote from: Sheilbh on April 16, 2014, 10:17:22 AM
But I agree a lot about the rest. I think there are companies behaving like they're in the ancien regime now. They negotiate their tax bills. They're monopolistic and anti-competitive. And very often they're in the tech world so they get a round of applause from everyone for doing it.
If that's what you meant, Tamas, then perhaps we have some common ground.
Quote from: Jacob on April 16, 2014, 10:15:40 AM
Quote from: Tamas on April 16, 2014, 10:06:42 AM
Fair enough.
I think, and I have been saying here for a while now that the kind of setup we have in the first world (I guess it could be called corporatism) (most notably in the US I guess, in the EU it is more hidden, and in symbiosis, with the bureaucratic weight on everything), is actually mainly a tool in the hands of the ruling class, and what all the regulations and welfare spending primarily achieves is the strengthening of the "aristocracy's" position, by discouraging more free market circumstances, as well as redistributing wealth in a manner that not only pacifies the poor, but also hides underlying long term problems with the system, as well as stops most "challengers" to emerge from the middle class.
We draw almost diametrically opposite conclusions.
To me - and I look at the Scandinavian model here - a rational system of redistribution and regulation is the best guarantor of relative social equality and allows people from lower economic strata the best chances to improve their position.
A lack of regulation and redistributive policies allow those with greater economic power to use it to entrench their position and make movement more difficult, and generally leads to clientism.
I believe the data bears me out on that too.
That said, I have no doubt that a poorly thought out set of regulations and redistribution can be captured by the elite economic classes and wielded for their own benefit to entrench their position. I just think that's more characteristic of the post-communist states in the East rather than the EU; I think that an argument can possibly be made that there's a trend towards that in the US as well. But I don't think the answer there is to do away with regulation and redistribution, but rather to reform and rationalize it (while acknowledging that that may be impossible politically).
I think the Scandinavian models are the exception and not the rule. They are countries with enviably high cohesion in society, removed from geopolitical "storms" on account of geography, and they have a healthy amount of natural resources.
I do think the societial cohesion is the key, not the natural riches, mind, but still I think their model cannot really work unless you both have good geographical realities, AND an advanced and homogenous society.
Quote from: Jacob on April 16, 2014, 10:21:41 AM
Quote from: Sheilbh on April 16, 2014, 10:17:22 AM
But I agree a lot about the rest. I think there are companies behaving like they're in the ancien regime now. They negotiate their tax bills. They're monopolistic and anti-competitive. And very often they're in the tech world so they get a round of applause from everyone for doing it.
If that's what you meant, Tamas, then perhaps we have some common ground.
It totally is.
Actually I think this observation is behind almost all of the "dissent" about present world conditions around the first world in general. The difference (like between your take and mine) is how to answer it. Because we both want to increase the influence of one end of the current spectrum, while identifying the other end as the root of the problem, and vice versa.
Incidentally, I think this is what will be (if not already is) the prime ideological debate of the near future.
Quote from: Tamas on April 16, 2014, 10:24:43 AMI think the Scandinavian models are the exception and not the rule. They are countries with enviably high cohesion in society, removed from geopolitical "storms" on account of geography, and they have a healthy amount of natural resources.
I do think the societial cohesion is the key, not the natural riches, mind, but still I think their model cannot really work unless you both have good geographical realities, AND an advanced and homogenous society.
I think Canada is a pretty good candidate for this sort of thing as well, in spite of not being homogenous. Scandinavia is getting less homogenous in any case.
The Scandinavian model can only work in places that are incredibly cold. Russia should really give it a shot.
But seriously though there has got to be a reason the Scandinavian model has been there forever and hardly anybody has been successful in applying it.
Here is an analysis heavily dismissing this French guy's thesis:
http://www.dissentmagazine.org/article/kapital-for-the-twenty-first-century
Quote1.
What is "capital"? To Karl Marx, it was a social, political, and legal category—the means of control of the means of production by the dominant class. Capital could be money, it could be machines; it could be fixed and it could be variable. But the essence of capital was neither physical nor financial. It was the power that capital gave to capitalists, namely the authority to make decisions and to extract surplus from the worker.
Early in the last century, neoclassical economics dumped this social and political analysis for a mechanical one. Capital was reframed as a physical item, which paired with labor to produce output. This notion of capital permitted mathematical expression of the "production function," so that wages and profits could be linked to the respective "marginal products" of each factor. The new vision thus raised the uses of machinery over the social role of its owners and legitimated profit as the just return to an indispensable contribution.
Symbolic mathematics begets quantification. For instance, if one is going to claim that one economy uses more capital (in relation to labor) than another, there must be some common unit for each factor. For labor it could be an hour of work time. But for capital? Once one leaves behind the "corn model" in which capital (seed) and output (flour) are the same thing, one must somehow make commensurate all the diverse bits of equipment and inventory that make up the actual "capital stock." But how?
Although Thomas Piketty, a professor at the Paris School of Economics, has written a massive book entitled Capital in the Twenty-First Century, he explicitly (and rather caustically) rejects the Marxist view. He is in some respects a skeptic of modern mainstream economics, but he sees capital (in principle) as an agglomeration of physical objects, in line with the neoclassical theory. And so he must face the question of how to count up capital-as-a-quantity.
His approach is in two parts. First, he conflates physical capital equipment with all forms of money-valued wealth, including land and housing, whether that wealth is in productive use or not. He excludes only what neoclassical economists call "human capital," presumably because it can't be bought and sold. Then he estimates the market value of that wealth. His measure of capital is not physical but financial.
This, I fear, is a source of terrible confusion. Much of Piketty's analysis turns on the ratio of capital—as he defines it—to national income: the capital/income ratio. It should be obvious that this ratio depends heavily on the flux of market value. And Piketty says as much. For example, when he describes the capital/income ratio plummeting in France, Britain, and Germany after 1910, he is referring only in part to physical destruction of capital equipment. There was almost no physical destruction in Britain during the First World War, and that in France was vastly overstated at the time, as Keynes showed in 1919. There was also very little in Germany, which was intact until the war's end.
So what happened? The movement of Piketty's ratio was largely due to much higher incomes, produced by wartime mobilization, in relation to the existing market cap, whose gains were restricted or fell during and after the war. Later, when asset values collapsed during the Great Depression, it mainly wasn't physical capital that disintegrated, only its market value. During the Second World War, destruction played a larger role. The problem is that while physical and price changes are obviously different, Piketty treats them as if there were aspects of the same thing.
The evolution of inequality is not a natural process.
Piketty goes on to show that in relation to current income, the market value of capital assets has risen sharply since the 1970s. In the Anglo-American world, he calculates, this ratio rose from 250–300 percent of income at that time to 500–600 percent today. In some sense, "capital" has become more important, more dominant, a bigger factor in economic life.
Piketty attributes this rise to slower economic growth in relation to the return on capital, according to a formula he dubs a "fundamental law." Algebraically, it is expressed as r>g, where r is the return on capital and g is the growth of income. Here again, he seems to be talking about physical volumes of capital, augmented year after year by profit and saving.
But he isn't measuring physical volumes, and his formula does not explain the patterns in different countries very well. For instance, his capital-income ratio peaks for Japan in 1990—almost a quarter century ago, at the start of the long Japanese growth slump—and for the United States in 2008. Whereas in Canada, which did not have a financial crash, it's apparently still rising. A simple mind might say that it's market value rather than physical quantity that is changing, and that market value is driven by financialization and exaggerated by bubbles, rising where they are permitted and falling when they pop.
Piketty wants to provide a theory relevant to growth, which requires physical capital as its input. And yet he deploys an empirical measure that is unrelated to productive physical capital and whose dollar value depends, in part, on the return on capital. Where does the rate of return come from? Piketty never says. He merely asserts that the return on capital has usually averaged a certain value, say 5 percent on land in the nineteenth century, and higher in the twentieth.
The basic neoclassical theory holds that the rate of return on capital depends on its (marginal) productivity. In that case, we must be thinking of physical capital—and this (again) appears to be Piketty's view. But the effort to build a theory of physical capital with a technological rate-of-return collapsed long ago, under a withering challenge from critics based in Cambridge, England in the 1950s and 1960s, notably Joan Robinson, Piero Sraffa, and Luigi Pasinetti.
Piketty devotes just three pages to the "Cambridge-Cambridge" controversies, but they are important because they are wildly misleading. He writes:
Controversy continued . . . between economists based primarily in Cambridge, Massachusetts (including [Robert] Solow and [Paul] Samuelson) . . . and economists working in Cambridge, England . . . who (not without a certain confusion at times) saw in Solow's model a claim that growth is always perfectly balanced, thus negating the importance Keynes had attributed to short-term fluctuations. It was not until the 1970s that Solow's so-called neoclassical growth model definitively carried the day.
But the argument of the critics was not about Keynes, or fluctuations. It was about the concept of physical capital and whether profit can be derived from a production function. In desperate summary, the case was three-fold. First: one cannot add up the values of capital objects to get a common quantity without a prior rate of interest, which (since it is prior) must come from the financial and not the physical world. Second, if the actual interest rate is a financial variable, varying for financial reasons, the physical interpretation of a dollar-valued capital stock is meaningless. Third, a more subtle point: as the rate of interest falls, there is no systematic tendency to adopt a more "capital-intensive" technology, as the neoclassical model supposed.
In short, the Cambridge critique made meaningless the claim that richer countries got that way by using "more" capital. In fact, richer countries often use less apparent capital; they have a larger share of services in their output and of labor in their exports—the "Leontief paradox." Instead, these countries became rich—as Pasinetti later argued—by learning, by improving technique, by installing infrastructure, with education, and—as I have argued—by implementing thoroughgoing regulation and social insurance. None of this has any necessary relation to Solow's physical concept of capital, and still less to a measure of the capitalization of wealth in financial markets.
There is no reason to think that financial capitalization bears any close relationship to economic development. Most of the Asian countries, including Korea, Japan, and China, did very well for decades without financialization; so did continental Europe in the postwar years, and for that matter so did the United States before 1970.
And Solow's model did not carry the day. In 1966 Samuelson conceded the Cambridge argument!
2.
The empirical core of Piketty's book is about the distribution of income as revealed by tax records in a handful of rich countries—mainly France and Britain but also the United States, Canada, Germany, Japan, Sweden, and some others. Its virtues lie in permitting a long view and in giving detailed attention to the income of elite groups, which other approaches to distribution often miss.
Piketty shows that in the mid-twentieth century the income share accruing to the top-most groups in his countries fell, thanks mainly to the effects and after-effects of the Second World War. These included unionization and rising wages, progressive income tax rates, and postwar nationalizations and expropriations in Britain and France. The top shares remained low for three decades. They then rose from the 1980s onward, sharply in the United States and Britain and less so in Europe and Japan.
Wealth concentrations seem to have peaked around 1910, fallen until 1970, and then increased once again. If Piketty's estimates are correct, top wealth shares in France and the United States remain today below their Belle Époque values, while U.S. top income shares have returned to their values in the Gilded Age. Piketty also believes the United States is an extreme case—that income inequality here today exceeds that in some major developing countries, including India, China, and Indonesia.
How original and how reliable are these measures? Early on, Piketty makes a claim to be the sole living heir of Simon Kuznets, the great midcentury scholar of inequalities. He writes:
Oddly, no one has ever systematically pursued Kuznets's work, no doubt in part because the historical and statistical study of tax records falls into a sort of academic no-man's land, too historical for economists and too economistic for historians. That is a pity, because the dynamics of income inequality can only be studied in a long-run perspective, which is possible only if one makes use of tax records.
The statement is incorrect. Tax records are not the only available source of good inequality data. In research over twenty years, this reviewer has used payroll records to measure the long-run evolution of inequalities; in a paper published back in 1999, Thomas Ferguson and I tracked such measures for the United States to 1920—and we found roughly the same pattern as Piketty finds now.*
It is good to see our results confirmed, for this underscores a point of great importance. The evolution of inequality is not a natural process. The massive equalization in the United States between 1941 and 1945 was due to mobilization conducted under strict price controls alongside confiscatory top tax rates. The purpose was to double output without creating wartime millionaires. Conversely, the purpose of supply-side economics after 1980 was (mainly) to enrich the rich. In both cases, policy largely achieved the effect intended.
Under President Reagan, changes to U.S. tax law encouraged higher pay to corporate executives, the use of stock options, and (indirectly) the splitting of new technology firms into separately capitalized enterprises, which would eventually include Intel, Apple, Oracle, Microsoft, and the rest. Now, top incomes are no longer fixed salaries but instead closely track the stock market. This is the simple result of concentrated ownership, the flux in asset prices, and the use of capital funds for executive pay. During the tech boom, the correspondence between changing income inequality and the NASDAQ was exact, as Travis Hale and I show in a paper just published in the World Economic Review.
The lay reader will not be surprised. Academics, though, have to contend with the conventionally dominant work of (among others) Claudia Goldin and Lawrence Katz, who argue that the pattern of changing income inequalities in America is the result of a "race between education and technology" when it comes to wages, with first one in the lead and then the other. (When education leads, inequality supposedly falls, and vice versa.) Piketty pays deference to this claim but he adds no evidence in favor, and his facts contradict it. The reality is that wage structures change far less than profit-based incomes, and most of increasing inequality comes from an increasing flow of profit income to the very rich.
In global comparison, there is a good deal of evidence, and (so far as I know) none of it supports Piketty's claim that U.S. income today is more unequal than in the major developing countries. Branko Milanović identifies South Africa and Brazil as having the highest inequalities. New work from the Luxembourg Income Study (LIS) places Indian income inequality well above that in the United States. My own estimates place United States inequality below the non-OECD average, and my estimates agree with those of the LIS on India.
A likely explanation for the discrepancies is that income tax data are only as comparable as legal definitions of taxable income permit, and only as accurate as tax systems are effective. Both factors become problematic in developing countries, so that income tax data will not capture the degree of inequalities that other measures reveal. (And of oil sheikhdoms where income goes untaxed, nothing can be learned.) Conversely, good tax systems reveal inequality. In the United States, the IRS remains feared and respected, an agency to which even the wealthy report, for the most part, most of their income. Tax records are useful but it is a mistake to treat them as holy writ.
3.
To summarize so far, Thomas Piketty's book about capital is neither about capital in the sense used by Marx nor about the physical capital that serves as a factor of production in the neoclassical model of economic growth. It is a book mainly about the valuation placed on tangible and financial assets, the distribution of those assets through time, and the inheritance of wealth from one generation to the next.
Why is this interesting? Adam Smith wrote the definitive one-sentence treatment: "Wealth, as Mr. Hobbes says, is power." Private financial valuation measures power, including political power, even if the holder plays no active economic role. Absentee landlords and the Koch brothers have power of this type. Piketty calls it "patrimonial capitalism"—in other words, not the real thing.
The old system of high marginal tax rates was effective in its time. But would it work to go back to that system now? Alas, it would not.
Thanks to the French Revolution, registry of wealth and inheritance has been good in Piketty's homeland for a long time. This allows Piketty to show how the simple determinants of the concentration of wealth are the rate of return on assets and the rates of economic and population growth. If the rate of return exceeds the growth rate, then the rich and the elderly gain in relation to everyone else. Meanwhile, inheritances depend on the extent to which the elderly accumulate—which is greater the longer they live—and on the rate at which they die. These two forces yield a flow of inheritances that Piketty estimates to be about 15 percent of annual income presently in France—astonishingly high for a factor that gets no attention at all in newspapers or textbooks.
Moreover, for France, Germany, and Britain, the "inheritance flow" has been rising since 1980, from negligible levels to substantial ones, due to a higher rate of return on financial assets along with a slightly rising mortality rate in an older population. The trend seems likely to continue—though one wonders about the effect of the financial crisis on valuations. Piketty also shows (to the small extent that data allow) that the share of global wealth held by a tiny group of billionaires has been rising much more rapidly than average global income.
What is the policy concern? Piketty writes:
[N]o matter how justified inequalities of wealth may be initially, fortunes can grow and perpetuate themselves beyond all reasonable limits and beyond any possible rational justification in terms of social utility. Entrepreneurs thus tend to turn into rentiers, not only with the passing of generations but even within a single lifetime. . . . [A] person who has good ideas at the age of forty will not necessarily still be having them at ninety, nor are his children sure to have any. Yet the wealth remains.
With this passage he makes a distinction that he previously blurred: between wealth justified by "social utility" and the other kind. It is the old distinction between "profit" and "rent." But Piketty has removed our ability to use the word "capital" in this normal sense, to refer to the factor input that yields a profit in the "productive" sector, and to distinguish it from the source of income of the "rentier."
As for remedy, Piketty's dramatic call is for a "progressive global tax on capital"—by which he means a wealth tax. Indeed, what could be better suited to an age of inequality (and budget deficits) than a levy on the holdings of the rich, wherever and in whatever form they may be found? But if such a tax fails to discriminate between fortunes that have ongoing "social utility" and those that don't—a distinction Piketty himself has just drawn—then it may not be the most carefully thought-out idea.
In any case, as Piketty admits, this proposal is "utopian." To begin with, in a world where only a few countries accurately measure high incomes, it would require an entirely new tax base, a worldwide Domesday Book recording an annual measure of everyone's personal net worth. That is beyond the abilities of even the NSA. And if the proposal is utopian, which is a synonym for futile, then why make it? Why spend an entire chapter on it—unless perhaps to incite the naive?
Piketty's further policy views come in two chapters to which the reader is bound to arrive, after almost five hundred pages, a bit worn out. These reveal him to be neither radical nor neoliberal, nor even distinctively European. Despite having made some disparaging remarks early on about the savagery of the United States, it turns out that Thomas Piketty is a garden-variety social welfare democrat in the mold, largely, of the American New Deal.
How did the New Deal tackle the fortress of privilege that was the early twentieth-century United States? First, it built a system of social protections, including Social Security, the minimum wage, fair labor standards, conservation, public jobs, and public works, none of which had existed before. And the New Dealers regulated the banks, refinanced mortgages, and subdued corporate power. They built wealth shared in common by the community as a counterweight to private assets.
Another part of the New Deal (mainly in its later phase) was taxation. With war coming, Roosevelt imposed high progressive marginal tax rates, especially on unearned income from capital ownership. The effect was to discourage high corporate pay. Big business retained earnings, built factories and (after the war) skyscrapers, and did not dilute its shares by handing them out to insiders.
Piketty devotes only a few pages to the welfare state. He says very little about public goods. His focus remains taxes. For the United States, he urges a return to top national rates of 80 percent on annual incomes over $500,000 or $1,000,000. This may be his most popular idea in U.S. liberal circles nostalgic for the glory years. And to be sure, the old system of high marginal tax rates was effective in its time.
But would it work to go back to that system now? Alas, it would not. By the 1960s and '70s, those top marginal tax rates were loophole-ridden. Corporate chiefs could compensate for low salaries with big perks. The rates were hated most by the small numbers who earned large sums with (mostly) honest work and had to pay them: sports stars, movie actors, performers, marquee authors, and so forth. The sensible point of the Tax Reform Act of 1986 was to simplify matters by imposing lower rates on a much broader base of taxable income. Raising rates again would not produce (as Piketty correctly states) a new generation of tax exiles. The reason is that it would be too easy to evade the rates, with tricks unavailable to the unglobalized plutocrats of two generations back. Anyone familiar with international tax avoidance schemes like the "Double Irish Dutch Sandwich" will know the drill.
If the heart of the problem is a rate of return on private assets that is too high, the better solution is to lower that rate of return. How? Raise minimum wages! That lowers the return on capital that relies on low-wage labor. Support unions! Tax corporate profits and personal capital gains, including dividends! Lower the interest rate actually required of businesses! Do this by creating new public and cooperative lenders to replace today's zombie mega-banks. And if one is concerned about the monopoly rights granted by law and trade agreements to Big Pharma, Big Media, lawyers, doctors, and so forth, there is always the possibility (as Dean Baker reminds us) of introducing more competition.
Finally, there is the estate and gift tax—a jewel of the Progressive era. This Piketty rightly favors, but for the wrong reason. The main point of the estate tax is not to raise revenue, nor even to slow the creation of outsized fortunes per se; the tax does not interfere with creativity or creative destruction. The key point is to block the formation of dynasties. And the great virtue of this tax, as applied in the United States, is the culture of conspicuous philanthropy that it fosters, recycling big wealth to universities, hospitals, churches, theaters, libraries, museums, and small magazines.
These are the nonprofits that create about 8 percent of U.S. jobs, and whose services enhance the living standards of the whole population. Obviously the tax that fuels this philanthropy is today much eroded; dynasty is a huge political problem. But unlike the capital levy, the estate tax remains viable, in principle, because it requires that wealth be appraised only once, on the demise of the holder. Much more could be done if the law were tightened up, with a high threshold, a high rate, no loopholes, and less use of funds for nefarious politics, including efforts to destroy the estate tax.
In sum, Capital in the Twenty-First Century is a weighty book, replete with good information on the flows of income, transfers of wealth, and the distribution of financial resources in some of the world's wealthiest countries. Piketty rightly argues, from the beginning, that good economics must begin—or at least include—a meticulous examination of the facts. Yet he does not provide a very sound guide to policy. And despite its great ambitions, his book is not the accomplished work of high theory that its title, length, and reception (so far) suggest.
James K. Galbraith is professor at the Lyndon B. Johnson School of Public Affairs, the University of Texas at Austin, and author of the forthcoming book, The End of Normal.
Interesting article. I am still digesting some of the points.
Quote from: Tamas on April 16, 2014, 10:36:14 AM
Here is an analysis heavily dismissing this French guy's thesis:
Interesting.
I don't know if it counts as "heavily dismissing", at least not the parts which we have be have been discussing. I'm still digesting it, like Norgy, but it seems that Galbraith disagrees about some of the definitions of capital, and about some of the prescriptions to deal with inequality (the higher marginal tax rate), but not about the fact that economic inequality is growing and returning to pre war levels.
Quote from: Jacob on April 16, 2014, 12:09:52 PM
Quote from: Tamas on April 16, 2014, 10:36:14 AM
Here is an analysis heavily dismissing this French guy's thesis:
Interesting.
I don't know if it counts as "heavily dismissing", at least not the parts which we have be have been discussing. I'm still digesting it, like Norgy, but it seems that Galbraith disagrees about some of the definitions of capital, and about some of the prescriptions to deal with inequality (the higher marginal tax rate), but not about the fact that economic inequality is growing and returning to pre war levels.
Yes but as far as I understand he does invalidate the key unique points of the French book
Quote from: Tamas on April 16, 2014, 12:16:27 PMYes but as far as I understand he does invalidate the key unique points of the French book
What are the key unique points?
I think the growth of internal inequality in most countries isn't possible to just dismiss. There's just a question of how to address it.
We need investment, obviously, so stilfling it would serve no-one. We need enterpreneurs.
But do we need hedge fund managers? Not really.
Tax codes today mostly focus on employees (or "work") being taxed, while capital investments aren't taxed nearly hard enough.
But as soon as this happens, some cnut will just relocate to the Caymans or Cyprus. Remove all tax havens by blunt force.
King Cnut? One of your countrymen I believe.
Quote from: Norgy on April 16, 2014, 12:22:06 PM
I think the growth of internal inequality in most countries isn't possible to just dismiss. There's just a question of how to address it.
Well there is also the question of why it is happening.
Quote
What's The Difference Between Fascism, Communism And Crony-Capitalism?
The essence of crony-capitalism is the merger of state and corporate power--the definition of fascism.
When it comes to the real world, the difference between fascism, communism and crony-capitalism is semantic. Let's start with everyone's favorite hot-word, fascism, which Italian dictator Benito Mussolini defined as "the merger of state and corporate power." In other words, the state and corporate cartels are one system.
Real-world communism, for example as practiced in the People's Republic of China, boils down to protecting a thoroughly corrupt elite and state-owned enterprises (SOEs). The state prohibits anything that threatens the profits (and bribes) of SOEs--for example, taxi-apps that enable consumers to bypass the SOE cab companies.
What A Ban On Taxi Apps In Shanghai Says About China's Economy
The Chinese mega-city of Shanghai has been cracking down on popular taxi-booking apps, banning their use during rush hour. Until the apps came along, the taxi companies, which are government owned, set the real price for fares and collected about 33 cents each time someone called for a cab. That can add up in a city the size of Shanghai. Wang says the apps bypassed the old system and cut into company revenues.
Much has been made of China's embrace of capitalism, but — along with transportation — the government still dominates key sectors, including energy, telecommunications and banking. Wang says vested government interests won't give them up easily.
How else to describe this other than the merger of state and corporate power? Any company the state doesn't own operates at the whim of the state.
Now let's turn to the crony-capitalist model of the U.S., Japan, the European Union and various kleptocracies around the globe. For PR purposes, the economies of these nations claim to be capitalist, as in free-market capitalism.
Nothing could be further from the truth: these economies are crony-capitalist systems that protect and enrich elites, insiders and vested interests who the state shields from competition and the law.
The essence of crony-capitalism is of course the merger of state and corporate power. There are two sets of laws, one for the non-elites and one for cronies, and two kinds of capitalism: the free-market variety for small businesses that are unprotected by the state and the crony variety for corporations, cartels and state fiefdoms protected by the state.
Since crony-capitalism is set up to benefit parasitic politicos and their private-sector cartel benefactors, reform is impossible. Even the most obviously beneficial variety of reform--for example, simplifying the 4 million-word U.S. tax code--is politically impossible, regardless of who wins the electoral equivalent of a game show (i.e. Demopublicans vs. Republicrats).
The annual cost of navigating the tax code comes to about $170 billion:
Since 2001, Congress has enacted about one new change to the tax law per day. Pathetic, isn't it? This tax code is a burden and a fiasco and deeply unpatriotic. As Olson's Taxpayer Advocate Service notes, this code helps tax evaders; hurts ordinary, honest taxpayers; and corrodes trust in our system.
Here's why the tax code will never be simplified: tax breaks are what the parasitic politicos auction off to their crony-capitalist benefactors. Simplify the tax code and you take away the the intrinsically corrupt politicos' primary source of revenue: accepting enormous bribes in exchange for tax breaks for the super-wealthy.
You would also eliminate the livelihood of an entire industry that feeds off the complexities of the tax code. Tax attorneys don't just vote--they constitute a powerful lobby for the Status Quo, even if that Status Quo is rigged, unjust, wasteful, absurd, etc.
It's not that hard to design a simple and fair tax code. Setting aside the thousands of quibbles that benefit one industry or another, it's clear that a consumption-based tax is easier to collect and it promotes production rather than consumption: two good things.
As for a consumption tax being regressive, i.e. punishing low-income households, the solution is very straightforward: exempt real-food groceries (but not snacks, packaged or prepared foods such as fast-food), rent, utilities and local public transportation--the major expenses of low-income households.
1. A 10% consumption tax on everything else would raise about $1.1 trillion, or almost 2/3 of total income tax revenues, not counting payroll taxes (15.3% of all payroll/earned income up to around $113,000 annually, paid half-half by employees and employers), which generate about one-third of all Federal tax revenues and fund the majority of Social Security and a chunk of Medicare.
As for the claim that a 10% consumption tax would kill business--the typical sales tax in California is 9+%, and that hasn't wiped out consumption.
2. The balance could be raised by a progressive tax on unearned income, collected at the source. Most of the income of the super-wealthy is unearned, i.e. dividends, investment income, interest, capital gains, stock options, etc. As a result, a tax on unearned income (above, say, $10,000 annually to enable non-wealthy households to accrue some tax-free investment income) will be a tax on the super-wealthy who collect the vast majority of dividends, interest, capital gains and investment income.
A rough estimate would be 20% of all unearned income.
This would "tax the rich" while leaving all earned income untaxed, other than the payroll tax, which is based on the idea that everyone should pay into a system that secures the income of all workers. This would incentivize productive labor and de-incentivize speculation, rentier skimming, etc.
The corporate tax would be eliminated for several reasons:
1. It is heavily gamed, rewarding the scammers and punishing the honest
2. All income from enterprises is eventually distributed to individuals, who would pay the tax on all unearned investment income.
But such common-sense reform is politically impossible. That's why the answer to the question, what's the the difference between fascism, communism and crony-capitalism is nothing.
http://charleshughsmith.blogspot.com/2014/04/whats-difference-between-fascism.html (http://charleshughsmith.blogspot.com/2014/04/whats-difference-between-fascism.html)
QuoteSince crony-capitalism is set up to benefit parasitic politicos and their private-sector cartel benefactors, reform is impossible. Even the most obviously beneficial variety of reform--for example, simplifying the 4 million-word U.S. tax code--is politically impossible, regardless of who wins the electoral equivalent of a game show (i.e. Demopublicans vs. Republicrats).
I always vote for the Bipartisan Party.
QuoteAs for a consumption tax being regressive, i.e. punishing low-income households, the solution is very straightforward: exempt real-food groceries (but not snacks, packaged or prepared foods such as fast-food), rent, utilities and local public transportation--the major expenses of low-income households.
I've been saying that for some time now.
The value-added tax is meaningless these days and if it is to be kept, it should be a targeted tax on unwanted consumption, not your average food, utilities and public transport.
Not a bad piece for someone using blogspot.
Quote from: citizen k on April 16, 2014, 02:54:11 PM
As for a consumption tax being regressive, i.e. punishing low-income households, the solution is very straightforward: exempt real-food groceries (but not snacks, packaged or prepared foods such as fast-food),
So organic veggies and free range meats = tax break, Mickey D's = no tax break and this is supposed to make the tax less regressive? :hmm:
I'd exempt food entirely. Go nuts.
Quote from: Ideologue on April 16, 2014, 03:03:34 PM
I always vote for the Bipartisan Party.
I back the Crony Corruption Party.
Quote from: Ideologue on April 16, 2014, 03:07:00 PM
I'd exempt food entirely. Go nuts.
Same. I don't know why the author would want to muddle his proposal with Bloomburgesque health Nazism.
Quote from: Tamas on April 16, 2014, 10:36:14 AM
Here is an analysis heavily dismissing this French guy's thesis:
Tamas, you do realize this is a criticism from the left? I don't think it means what you seem to think it means, unless you just posted it for general interest.
If so - I am grateful - it is not every day or even every year that one sees in the mainstream a reference to the old Cambridge Capital Controversy, one of my favorite obscure economic puzzles.
But Galbraith doesn't quite get the summary right - it is true that Samuelson conceded the technical point, but the Cantabridgian "victory" was phyrric as the neoclassicals denied the practical significance of the critique and continued on as much before with some minor modification. Indeed, the Solow Growth model, which Galbraith implied was dead by the late 60s, is in fact virtually canonical - updated versions of it can be found at the heart of most present day macro textbooks for first year grad students. (in comparison the neo-Ricardian Pasinetti who Galbraith gives a shout out tends to be viewed as a heterodox figure).
I think that Galbraith makes some interesting points and it is cool in an econ-history-geek sort of way he has raised this old controversy, but it is important to understand that Piketty's framework is very much mainstream whereas what Galbraith is talking about is not.
He's a relative of the J. K. Galbraith, isn't he?
Quote from: Jacob on April 16, 2014, 12:09:52 PMI don't know if it counts as "heavily dismissing", at least not the parts which we have be have been discussing. I'm still digesting it, like Norgy, but it seems that Galbraith disagrees about some of the definitions of capital, and about some of the prescriptions to deal with inequality (the higher marginal tax rate), but not about the fact that economic inequality is growing and returning to pre war levels.
It was interesting. The bit about capital may be the most important issue there. The policy bit seems neither here nor there, Piketty's book isn't being talked about for its policy recommendations, but for its data. The review acknowledges that 'Piketty's further policy views come in two chapters to which the reader is bound to arrive, after almost five hundred pages, a bit worn out.'
Galbraith doesn't seem to question the value of the data, even if he disagrees with points of it. I did wonder if perhaps this was the key section of the review: 'The statement is incorrect. Tax records are not the only available source of good inequality data. In research over twenty years, this reviewer has used payroll records to measure the long-run evolution of inequalities; in a paper published back in 1999, Thomas Ferguson and I tracked such measures for the United States to 1920—and we found roughly the same pattern as Piketty finds now.'
Quote from: Sheilbh on April 16, 2014, 04:01:40 PM
Galbraith doesn't seem to question the value of the data, even if he disagrees with points of it. I did wonder if perhaps this was the key section of the review: 'The statement is incorrect. Tax records are not the only available source of good inequality data. In research over twenty years, this reviewer has used payroll records to measure the long-run evolution of inequalities; in a paper published back in 1999, Thomas Ferguson and I tracked such measures for the United States to 1920—and we found roughly the same pattern as Piketty finds now.'
Yeah, that passage made it seem like Galbraith was making a play for relevancy by nitpicking and saying "he agrees with me".
Quote from: The Minsky Moment on April 16, 2014, 03:15:19 PM
Quote from: Tamas on April 16, 2014, 10:36:14 AM
Here is an analysis heavily dismissing this French guy's thesis:
Tamas, you do realize this is a criticism from the left? I don't think it means what you seem to think it means, unless you just posted it for general interest.
If so - I am grateful - it is not every day or even every year that one sees in the mainstream a reference to the old Cambridge Capital Controversy, one of my favorite obscure economic puzzles.
But Galbraith doesn't quite get the summary right - it is true that Samuelson conceded the technical point, but the Cantabridgian "victory" was phyrric as the neoclassicals denied the practical significance of the critique and continued on as much before with some minor modification. Indeed, the Solow Growth model, which Galbraith implied was dead by the late 60s, is in fact virtually canonical - updated versions of it can be found at the heart of most present day macro textbooks for first year grad students. (in comparison the neo-Ricardian Pasinetti who Galbraith gives a shout out tends to be viewed as a heterodox figure).
I think that Galbraith makes some interesting points and it is cool in an econ-history-geek sort of way he has raised this old controversy, but it is important to understand that Piketty's framework is very much mainstream whereas what Galbraith is talking about is not.
it was just for general interest :)
Quote from: Norgy on April 16, 2014, 03:44:00 PM
He's a relative of the J. K. Galbraith, isn't he?
Son. And like his father, tends to the heterodox.
Quote from: Jacob on April 16, 2014, 04:37:11 PM
Yeah, that passage made it seem like Galbraith was making a play for relevancy by nitpicking and saying "he agrees with me".
Part of what is going on here is a disagreement among left-leaning economists about whether to reject the basic framework of neoclassical theory that undergirds mainstream macroeconomics - both inside and outside the economy - or whether to operate within that basic framework while pointing out anamolies or imperfections. I haven't gotten to Picketty's book yet but I gather he tends more to the second camp. Galbraith belongs more to the first.
Another thing that may be going on is that Galbraith wrote a pretty significant book on inequality a couple years back and perhaps is a bit irked at all the attention Picketty is getting.
Review by Tyler Cowen:
http://www.foreignaffairs.com/articles/141218/tyler-cowen/capital-punishment
QuoteEvery now and then, the field of economics produces an important book; this is one of them. Thomas Piketty's tome will put capitalist wealth back at the center of public debate, resurrect interest in the subject of wealth distribution, and revolutionize how people view the history of income inequality. On top of that, although the book's prose (translated from the original French) might not qualify as scintillating, any educated person will be able to understand it -- which sets the book apart from the vast majority of works by high-level economic theorists.
This is the first review or treatment of the book I've seen from the right so more interesting for it.
For a book about inequality the motherfucker is pretty expensive. Maybe when I'm working again I'll buy it. <_<
What makes this treatment "from the right?" Are you familiar with the reviewer?
Yep.
I've been reading his blog for years:
http://marginalrevolution.com/
He's broadly a libertarian. Classed as a 'soft libertarian' by David Brooks in his taxonomy of the vibrant online conversation among conservatives:
QuoteSoft Libertarians. Some of the most influential bloggers on the right, like Tyler Cowen, Alex Tabarrok and Megan McArdle, start from broadly libertarian premises but do not apply them in a doctrinaire way.
http://www.nytimes.com/2012/11/20/opinion/brooks-the-conservative-future.html?ref=davidbrooks&_r=3&
Another piece from the libertarian right:
http://blogs.telegraph.co.uk/finance/andrewlilico/100027131/solow-piketty-and-the-problem-with-bank-bailouts-and-deposit-insurance/
QuoteSolow, Piketty and the problem with bank bailouts and deposit insurance
By Andrew Lilico Politics and society Last updated: April 25th, 2014
45 Comments Comment on this article
Robert Solow (of 1956 Solow Growth model fame) has written a highly illuminating review of Thomas Piketty's widely discussed book "Capital in the Twenty-First Century". In it Solow sets out what he terms the "rich-get-richer dynamic", which he believes Piketty has demonstrated is intrinsic to Market Capitalism (and which Piketty and Solow both regard as justifying wealth taxes).
The essence of the case is this. Piketty attempts (with at least moderate success) to show that as economies grow, the rate of return on capital exceeds the growth rate. If, as is normal, we regard total economic output as divided between capital and labour, that mean's the share of the total economic pie taken by capital will rise over time. Furthermore, those with the most accumulated capital tend to secure the highest returns (because of better diversification and higher economies of scale in investing). So those with the most accumulated wealth will see their wealth grow materially faster than does the economy as a whole, meaning the richest get richer faster than everyone else, and inequality (in terms of the gap between richest and the median, or richest and poorest) increases.
There are lots of things to be said here about Bill Gates and Mark Zuckerberg not being the product of wealth inherited since the 18th century, about how globalisation and an increasing population allows a given idea to spread ever-quicker so wealth from novel sources overtakes older wealth (and don't assume that expansion of the economy or population must stop before we escape the earth to the stars, either...), and similar points – some of which Piketty responds to convincingly and some of which he does not. But let us take the point, as Solow does, in its own terms.
Now remember: this is argued (quite plausibly) to be an intrinsic long-term feature of Market Capitalism. It isn't just that the rich-get-richer dynamic applies in recessions or ages of austerity or anything of that sort. Rather, over centuries the richest have got richer fastest and will do so even faster in the future.
Piketty and Solow appear to believe that the key problem here is the increasing inequality. But even if you couldn't give two hoots about inequality (as I don't), this may seem morally problematic. After all, one theory of the moral defence of market capitalism is that it is intrinsically meritocratic and promoting of social mobility – those with the best ideas or most talent or who work hardest can achieve high rewards. If instead those who happen to inherit the most wealth from their parents make the largest gains in their wealth without needing to do any work at all, it's tougher to claim that market capitalism is intrinsically a merit-rewarding system.
It seems to me that there is a version of something that at least might look like market capitalism that would indeed render itself morally problematic in this way. If the system were such that some folk, without doing any work at all, would become increasingly wealthier than anyone else, living risk-free off the fruits of previously-accumulated capital, Piketty and Solow would have a point. But in a healthy capitalist system that will not be true.
How so? Well, capitalism got going precisely when (in the 16th and 17th centuries) a series of legal reforms and developments in moral thinking embedded the concept that lending at interest (the providing of capital that was not managed by the capital-provider, the "capitalist") could not be risk-free. Bankruptcy law, limited liability, the abolition of selling oneself into slavery to service debts, and a number of other reforms meant that no lender could (or should ever be able to) guarantee repayment of a debt made at interest.
Imagine for a moment that that is how market capitalism actually works, then think of the Solow-Piketty critique? Those with the most wealth – the most capital to invest – get a rate of return that is higher than the growth rate of the economy, but they do not do so passively and risk-free. Instead, they must choose how to allocate their capital between various intrinsically risky projects. The return to capital then is a form of reward for work – for the work of deciding what is the best project to invest in and for bearing the risk that investments go bad.
If this is how market capitalism works, the Solow-Piketty critique has much less bite. Instead of saying "Those with the most accumulated wealth become richer than others faster, without doing anything", we must say that "capitalism allows the richest to become richer faster than others, to the extent that they make (and as a reward for) wise investment choices."
But is it how market capitalism really works? One standard 19th century critique of capitalism was that it might all look morally robust in theory, with the idea that the richest might become poor if their investments fail and so forth, but in practice matters would not work like that. In practice, these critics said, the wealthiest would use the political influence that their wealth gave them to make sure that, if their investments ever looked like going bad, the state would intervene (taxing the poor and the middle classes, if necessary, to provide the funds) to protect the rich from downside risk, keeping them rich.
We saw the classic playing out of this dynamic in recent years in the banking crisis from 2007 on. In that case the "capitalists" in question were those that lent money to banks – bank depositors and bank bondholders. Bank deposit insurance and bank bondholder insurance makes the state into an instrument for defending the vested wealth of the rich. It was felt politically impossible, across most of the developed world, to allow bank depositors or bank bondholders to lose any money.
If that is how the system works – if the state is used to prevent those with wealth from losing any of it – then the Solow-Piketty critique will have bite, and the moral defence of lending money at interest developed in the West in the 16th and 17th centuries will collapse.
Now of course those that intervened in 2007-on to keep the rich rich did not believe that was all that they were doing. They were persuaded that if bank depositors and bank bondholders were allowed to lose any money, then the poor would lose out as well – e.g. there might be mass unemployment. I believe their belief in this was totally wrong, but that's not the point. Let's suppose they were right. In a Piketty-type world, such a problem will get worse and worse over time. As the richest become richer and richer, more and more ordinary people will depend for their livelihoods upon servicing the needs of a smaller and smaller number of rich people. Then allowing any rich person to go bankrupt or even to take a modest fall in wealth will imply a disruption in the livelihoods of more and more ordinary people.
The implication is that, for market capitalism to work, the state will have to be willing to see periods of (potentially ever-escalating) disruption to the lives of ordinary people as the price for preventing the wealthiest being pure passive rentiers. It is not (and morally cannot be) the job of the state to keep the rich rich, even if by doing so the state softens the impact on the poor of the rich becoming poorer. If it does so, market capitalism will not work – either in terms of efficiency or in terms of moral defensibility.
QuoteHow so? Well, capitalism got going precisely when (in the 16th and 17th centuries) a series of legal reforms and developments in moral thinking embedded the concept that lending at interest (the providing of capital that was not managed by the capital-provider, the "capitalist") could not be risk-free. Bankruptcy law, limited liability, the abolition of selling oneself into slavery to service debts, and a number of other reforms meant that no lender could (or should ever be able to) guarantee repayment of a debt made at interest.
LOL.
Quote from: Ideologue on April 25, 2014, 10:51:07 PM
LOL.
:console:
Ah yeah. Except for American student loans.
Incidentally I think there's a very real argument that some American universities are real problematic, monastery-esque rentiers.
Quote from: Jacob on April 16, 2014, 09:47:37 AM
Of course, the second option leads to Norgy's posting of the Princeton study that shows that political decision-making is increasingly controlled by the wealthiest elites and non-responsive to the opinions and needs of the less-wealthy majority.
The US Supreme Court recently determined that this was how democracy (in America at least) was supposed to work.
All along, we thought that democracy was about elected officials being responsive to the desires of the people who elected them...but it turns out that it is actually that they are supposed to be responsive to the desires of the people who fund them.
Quote from: Jacob on April 16, 2014, 10:05:31 AM
Quote from: Tamas on April 16, 2014, 09:00:42 AM
On the other hand, isn't a healthy degree of wealth concentration is simply necessary for economic growth and suitably sized private initiative in industry and the like? I really don't know, I am just asking.
Well, of course a healthy degree of wealth concentration is necessary. I think the argument is that we're moving away from a healthy degree of concentration and towards an unhealthy one.
I defy anyone to look at the actual current numbers and say not only "Yeah, that seems about right" but in fact "No way, that seems wrong, it isn't concentrated enough, so yippee that it is getting worse all along! Progress!"
https://www.youtube.com/watch?v=vttbhl_kDoo
Quote from: Berkut on April 26, 2014, 12:20:34 AM
The US Supreme Court recently determined that this was how democracy (in America at least) was supposed to work.
All along, we thought that democracy was about elected officials being responsive to the desires of the people who elected them...but it turns out that it is actually that they are supposed to be responsive to the desires of the people who fund them.
When have you ever changed your vote because of political advertising? When has someone you know changed their vote because of political advertising?
A lot of people stayed home because of those Willie Horton ads, right?
Quote from: Admiral Yi on April 26, 2014, 01:45:42 AM
Quote from: Berkut on April 26, 2014, 12:20:34 AM
The US Supreme Court recently determined that this was how democracy (in America at least) was supposed to work.
All along, we thought that democracy was about elected officials being responsive to the desires of the people who elected them...but it turns out that it is actually that they are supposed to be responsive to the desires of the people who fund them.
When have you ever changed your vote because of political advertising? When has someone you know changed their vote because of political advertising?
42
Quote from: Admiral Yi on April 26, 2014, 01:45:42 AM
Quote from: Berkut on April 26, 2014, 12:20:34 AM
The US Supreme Court recently determined that this was how democracy (in America at least) was supposed to work.
All along, we thought that democracy was about elected officials being responsive to the desires of the people who elected them...but it turns out that it is actually that they are supposed to be responsive to the desires of the people who fund them.
When have you ever changed your vote because of political advertising? When has someone you know changed their vote because of political advertising?
I doubt many people in Languish change votes because of ads. Many of us will be too used to debate to fall for the sound-bite.
However, the population at large rarely follows politics with such scrutiny.
I also don't think it's about changing peoples' votes as much as to get independents or people that would otherwise stay at home to vote for you.
Also in the US funding plays a huge part in primaries, where you will have a bunch of "natural" voters that are not pledged to a candidate.
Quote from: celedhring on April 26, 2014, 05:43:33 AM
I also don't think it's about changing peoples' votes as much as to get independents or people that would otherwise stay at home to vote for you.
Also in the US funding plays a huge part in primaries, where you will have a bunch of "natural" voters that are not pledged to a candidate.
The biggest issue isn't necesariLY about advertising, it is about the incredible expense of funding a campain, of which advertising is just one part.
So politicians need money, a lot of money, to stay in power. They have to get it from someone. It is rather obvious that those who give it to them expect something in return. The more it costs, the more it becomes solely the place of the ultra-rich to fund, and the less and less relevance the not ultra rich will have.
Sure, we all get to vote...amongst a set of candidates who have all gotten to the point where we get to cast a vote for or against them, by being funded my the mega-rich.
So yippeee! You get to choose between various candidates, all of which are beholden to those who put them there...and that isn't the people who voted for them.
So it is obvious that reform of the way in which campaigns are financed is desperately needed. That is hard, since the people who must pass the laws to reform it are the same people who benefit from the corrupt system to begin with.
But now, we have the USSC saying that even if you can manage to get reform legislation passed, they will knock it all down, because this process by which the ultra wealthy buy politicians and those politicians then serve their interests instead of the interests of the voters...
.is the system working as designed.I guess I should not say the USSC, since it is actually just 5 of them, including the Chief Justice. I used to think Roberts wasn't so bad, but his decision recently has firmly planted him in the "maybe one of the worst justices of all time" camp.
Quote from: Ideologue on April 21, 2014, 04:54:55 PM
For a book about inequality the motherfucker is pretty expensive. Maybe when I'm working again I'll buy it. <_<
Or loan it from a library?
Quote from: Duque de Bragança on April 27, 2014, 03:48:30 AM
Quote from: Ideologue on April 21, 2014, 04:54:55 PM
For a book about inequality the motherfucker is pretty expensive. Maybe when I'm working again I'll buy it. <_<
Or loan it from a library?
I tried that recently. Would have been cheaper to just buy the books. :P
Quote from: Berkut on April 26, 2014, 07:42:55 PM
Quote from: celedhring on April 26, 2014, 05:43:33 AM
I also don't think it's about changing peoples' votes as much as to get independents or people that would otherwise stay at home to vote for you.
Also in the US funding plays a huge part in primaries, where you will have a bunch of "natural" voters that are not pledged to a candidate.
The biggest issue isn't necesariLY about advertising, it is about the incredible expense of funding a campain, of which advertising is just one part.
So politicians need money, a lot of money, to stay in power. They have to get it from someone. It is rather obvious that those who give it to them expect something in return. The more it costs, the more it becomes solely the place of the ultra-rich to fund, and the less and less relevance the not ultra rich will have.
Sure, we all get to vote...amongst a set of candidates who have all gotten to the point where we get to cast a vote for or against them, by being funded my the mega-rich.
So yippeee! You get to choose between various candidates, all of which are beholden to those who put them there...and that isn't the people who voted for them.
So it is obvious that reform of the way in which campaigns are financed is desperately needed. That is hard, since the people who must pass the laws to reform it are the same people who benefit from the corrupt system to begin with.
But now, we have the USSC saying that even if you can manage to get reform legislation passed, they will knock it all down, because this process by which the ultra wealthy buy politicians and those politicians then serve their interests instead of the interests of the voters....is the system working as designed.
I guess I should not say the USSC, since it is actually just 5 of them, including the Chief Justice. I used to think Roberts wasn't so bad, but his decision recently has firmly planted him in the "maybe one of the worst justices of all time" camp.
Yes, it's rather a sorry state of affairs.
Quote from: Berkut on April 26, 2014, 07:42:55 PM
But now, we have the USSC saying that even if you can manage to get reform legislation passed, they will knock it all down, because this process by which the ultra wealthy buy politicians and those politicians then serve their interests instead of the interests of the voters....is the system working as designed.
The most infamous phrase in a SC decision in a long time. Just breathtaking.
Quote from: Berkut on April 26, 2014, 07:42:55 PM
Quote from: celedhring on April 26, 2014, 05:43:33 AM
I also don't think it's about changing peoples' votes as much as to get independents or people that would otherwise stay at home to vote for you.
Also in the US funding plays a huge part in primaries, where you will have a bunch of "natural" voters that are not pledged to a candidate.
The biggest issue isn't necesariLY about advertising, it is about the incredible expense of funding a campain, of which advertising is just one part.
So politicians need money, a lot of money, to stay in power. They have to get it from someone. It is rather obvious that those who give it to them expect something in return. The more it costs, the more it becomes solely the place of the ultra-rich to fund, and the less and less relevance the not ultra rich will have.
Sure, we all get to vote...amongst a set of candidates who have all gotten to the point where we get to cast a vote for or against them, by being funded my the mega-rich.
So yippeee! You get to choose between various candidates, all of which are beholden to those who put them there...and that isn't the people who voted for them.
So it is obvious that reform of the way in which campaigns are financed is desperately needed. That is hard, since the people who must pass the laws to reform it are the same people who benefit from the corrupt system to begin with.
But now, we have the USSC saying that even if you can manage to get reform legislation passed, they will knock it all down, because this process by which the ultra wealthy buy politicians and those politicians then serve their interests instead of the interests of the voters....is the system working as designed.
I guess I should not say the USSC, since it is actually just 5 of them, including the Chief Justice. I used to think Roberts wasn't so bad, but his decision recently has firmly planted him in the "maybe one of the worst justices of all time" camp.
Eventually, all faith in the system of governance will be eroded. The sums forked out on campaigns are just stunningly high. And it's not like other countries aren't following suit.
I'm a little less than a quarter of the way through - not enough to give a view.
However, I did note that Piketty uses the word "appropriation" in a limited sense to refer to the acquisition and exploitation of natural resources like land or precious minerals, and uses "accumulation" to refer to the broader ways in which owners of capital generate returns. The one exception - (i had to peek ahead for this) is the passage quoted in the Martin Wolf FT piece. It would be interesting to see the original French phrasing to check whether this is a translation issue but in any case that one line does not appear to be generally representative of the tone.
Goldhammer is an amazing translator. I doubt he introduced such distortion.
Quote from: The Minsky Moment on April 28, 2014, 11:43:25 AM
However, I did note that Piketty uses the word "appropriation" in a limited sense to refer to the acquisition and exploitation of natural resources like land or precious minerals
I don't see why this should get a pass.
Quote from: Oexmelin on April 28, 2014, 12:30:59 PM
Goldhammer is an amazing translator. I doubt he introduced such distortion.
Oex! :hug:
Quote from: Admiral Yi on April 28, 2014, 12:34:58 PM
Quote from: The Minsky Moment on April 28, 2014, 11:43:25 AM
However, I did note that Piketty uses the word "appropriation" in a limited sense to refer to the acquisition and exploitation of natural resources like land or precious minerals
I don't see why this should get a pass.
I wasn't aware that a pass was required.
Quote from: Admiral Yi on April 26, 2014, 01:45:42 AMWhen have you ever changed your vote because of political advertising? When has someone you know changed their vote because of political advertising?
Is your argument that campaign funding does not affect electoral outcomes?
Quote from: The Minsky Moment on April 28, 2014, 12:56:58 PM
I wasn't aware that a pass was required.
It's not. I was under the impression you were granting one. If you weren't, there's no issue.
Piketty uses capital and wealth interchangably. This is a bit odd because many economists would distinguish unimproved land or mineral deposits as natural endownments from capital. Piketty's explanation is basically that it is too difficult to separate the unimproved value of land from the value of land as improved. That is where "appropriation" appears as a term - because capital in this broader sense includes not only assets and things that have been accumulated over time but the assertion of rights over unimproved natural endowments as well. If is a definitional matter, not a value judgment.
The value-free term to use in that situation would be "bought."
Quote from: Admiral Yi on April 28, 2014, 02:46:09 PM
The value-free term to use in that situation would be "bought."
That doesn't seem value-free at all.
Quote from: Jacob on April 28, 2014, 02:47:58 PM
That doesn't seem value-free at all.
Do you consider the act of buying a positive or a negative act?
Quote from: Oexmelin on April 28, 2014, 12:30:59 PM
Goldhammer is an amazing translator. I doubt he introduced such distortion.
And he has a great blog on French politics:
http://artgoldhammer.blogspot.co.uk/
Quote from: Admiral Yi on April 28, 2014, 02:46:09 PM
The value-free term to use in that situation would be "bought."
Value-free I don't know. But it wouldn't be accurate. "Bought" implies a market transaction. Piketty is talking about wealth. One does not buy wealth. Wealth is either accumulated or it is an underlying natural characteristic that adheres to some package of recognized ownership claims. "appropriation" is a useful short-cut word for the latter in the common English meaning of asserting exclusive possession. It certainly doesn't require a market transaction.
Quote from: Admiral Yi on April 28, 2014, 02:51:31 PM
Quote from: Jacob on April 28, 2014, 02:47:58 PM
That doesn't seem value-free at all.
Do you consider the act of buying a positive or a negative act?
Buying as a form of transaction is neither inherently positive or negative, but it carries with it an implication of legitimacy which is absent with "accumulation". In a sense, it is the mirror image of your complaint about "appropriation" (if I understood you correctly), which does have a whiff of illegitimacy about it.
Quote from: The Minsky Moment on April 28, 2014, 03:15:13 PM
Value-free I don't know. But it wouldn't be accurate. "Bought" implies a market transaction. Piketty is talking about wealth. One does not buy wealth. Wealth is either accumulated or it is an underlying natural characteristic that adheres to some package of recognized ownership claims. "appropriation" is a useful short-cut word for the latter in the common English meaning of asserting exclusive possession. It certainly doesn't require a market transaction.
What exactly do you mean by asserting exclusive possession?
Am I asserting exclusive possession of bank account? Of the clothes I'm wearing?
Quote from: Jacob on April 28, 2014, 03:28:52 PM
In a sense, it is the mirror image of your complaint about "appropriation" (if I understood you correctly), which does have a whiff of illegitimacy about it.
Appropriation has a whiff of compulsion about it; by definition, it is taking against the wishes of the prior possessor or user. It could be perfectly legitimate, though. I can appropriate land, or art, or anything that belongs to me and which I used to allow unlimited access to, and control that access.
Quote
http://www.zerohedge.com/contributed/2014-04-27/piketty-rickety-government-complicity (http://www.zerohedge.com/contributed/2014-04-27/piketty-rickety-government-complicity)
Piketty Is Rickety On Government Complicity
By George Washington
French economist Thomas Piketty's book on inequality – Capital in the Twenty-First Century [40] – has gone completely viral [41].
Mainstream economists like Paul Krugman [42] and Joseph Stiglitz [43] endorse it. So does Economist [44] magazine. The Financial Times [45]and New York [46] magazine both call him a "rock star economist".
Slate notes [47]:
While recently passing through D.C., he took a little time [48] to meet with Treasury Secretary Jack Lew, the Council of Economic Advisers, and the IMF. Even Morning Joe, never exactly on the leading edge of ideas journalism, ran a segment [49] about Capital Tuesday morning.
Is Piketty right or wrong about inequality, its causes and the prescription for addressing inequality?
Piketty Is Right about Inequality
We noted in 2010 that extreme inequality helped cause the Great Depression ... and the 2008 financial crisis [50]. We noted in 2011 that inequality helped cause the fall of the Roman Empire [51].
In a few short years [52], mainstream economists have gone from assuming that inequality doesn't matter, to realizing that runaway inequality cripples the economy.
Pikettey correctly notes that inequality is now the worst in world history ... and will only get worse [53].
Asset Prices Rise Faster than Wages
Piketty argues that the main cause for inequality is that the rate of return on capital – land, natural resources, stocks, bonds and other assets – is far higher than the growth rate of the economy:
[54]
Because the growth rate is much slower than the rate of profit from holding capital assets, the asset-holders' wealth increases much faster than the wealth of workers. In other words, working stiffs can't keep up with those who make their money from investing in (and seeking rent from) land, stocks, bonds and other assets.
Piketty – a rigorous data researcher – is probably right that this is one of the main causes of inequality.
Government and Central Bank Policy Is What Is Making Assets Soar and the Economy Sink
But Piketty underplays the fact that bad government and central bank policy have greatly widened the gap between growth rate. After all, Fed chairman Bernanke, Treasury Secretary Geithner and chief economist Summer's entire strategy was to artificially prop up asset prices [55] – including the stock market [56] – and see this [57], this [58], this [59] and this [60].
At the same time, government policy has harmed the general economy [61], caused unemployment [62] and hurt the average American [63].
Indeed, real wages have actually plummeted since 1969 [64], and most of the new jobs that have been created are part times jobs with no benefit [65].
In other words, bad government and central bank policy have made the rate of return on capital much higher ... but lowered wages. As such, bad policy is the core cause of the recent increase in inequality.
Nobel economist Joseph Stiglitz said [66] in 2009 that the government's toxic asset plan – a scheme to inflate the value of assets held by banks – "amounts to robbery of the American people".
Bailouts Feather the Nests of the Fatcats, While Doing Nothing for the Average American
The American government's top official in charge of the bank bailouts writes [67]:
Americans should lose faith in their government. They should deplore the captured politicians and regulators who distributed tax dollars to the banks without insisting that they be accountable. The American people should be revolted by a financial system that rewards failure and protects those who drove it to the point of collapse and will undoubtedly do so again.
Only with this appropriate and justified rage can we hope for the type of reform that will one day break our system free from the corrupting grasp of the megabanks.
What's he talking about?
Well, the Fed threw money at "several billionaires and tens of multi-millionaires" [68], including billionaire businessman H. Wayne Huizenga, billionaire Michael Dell of Dell computer, billionaire hedge fund manager John Paulson, billionaire private equity honcho J. Christopher Flowers, and the wife of Morgan Stanley CEO John Mack
And the bank bailouts weren't a one-time thing in 2008. The government has been – continuously and massively – been bailout out the big banks for the last 6 years.
Indeed, virtually all of the banks profits comes from government bailouts [69]. A top banking analyst estimates that subsidies to the giant banks exceeds $780 billion dollars each year [70].
A study of 124 banking crises by the International Monetary Fund found that bailing out banks which are only pretending to be solvent – like most of the big American banks [71] – harms the economy [72]. So growth is slowed, while the richest fatcat bankers rake in the dough.
Indeed, the bailout money is just going to line the pockets of the wealthy [73], instead of helping to stabilize the economy or even the companies receiving the bailouts:
• Bailout money is being used to subsidize [74] companies run by horrible business men, allowing the bankers to receive fat bonuses [75], to redecorate [76] their offices, and to buy gold toilets [77] and prostitutes [78]
• A lot of the bailout money is going to the failing companies' shareholders [79]
• Indeed, a leading progressive economist says [80] that the true purpose of the bank rescue plans is "a massive redistribution of wealth to the bank shareholders and their top executives"
(Top economists, financial experts and bankers say [81] that the big banks are too large ... and their very size is threatening the economy. They say we need to break up the big banks [82] to stabilize the economy.
If we stop bailing out the Wall Street welfare queens [83], the big banks would focus more on traditional lending and less on speculative casino gambling [84]. Indeed, if we break up the big banks, it will increase the ability of smaller banks to make loans to Main Street [85], which will level the playing field.
We're all for forcibly breaking them up. But we don't even have to use government power to break up the banks ... the big banks would fail on their own [71] if the government just stopped bailing them out [70].)
QE: the Greatest Wealth Transfer in History
It's been known for some time that quantitative easing (QE) increases inequality [86] (and see this [87] and this [88].) Many economists have said that QE quantitative easing benefits the rich, and hurts the little guy [89]. 3 academic studies [61] – and the architect of Japan's quantitative easing program [90] – all say that QE isn't helping the American economy.
The Federal Reserve official responsible for implementing $1.25 trillion of quantitative easing has confirmed that QE is just a massive bailout for the rich [91]:
I can only say: I'm sorry, America. As a former Federal Reserve official, I was responsible for executing the centerpiece program of the Fed's first plunge into the bond-buying experiment known as quantitative easing. The central bank continues to spin QE as a tool for helping Main Street. But I've come to recognize the program for what it really is: the greatest backdoor Wall Street bailout of all time.
***
Trading for the first round of QE ended on March 31, 2010. The final results confirmed that, while there had been only trivial relief for Main Street, the U.S. central bank's bond purchases had been an absolute coup for Wall Street. The banks hadn't just benefited from the lower cost of making loans. They'd also enjoyed huge capital gains on the rising values of their securities holdings and fat commissions from brokering most of the Fed's QE transactions. Wall Street had experienced its most profitable year ever in 2009, and 2010 was starting off in much the same way.
You'd think the Fed would have finally stopped to question the wisdom of QE. Think again. Only a few months later—after a 14% drop in the U.S. stock market and renewed weakening in the banking sector—the Fed announced a new round of bond buying: QE2. Germany's finance minister, Wolfgang Schäuble, immediately called the decision "clueless."
That was when I realized the Fed had lost any remaining ability to think independently from Wall Street.
Even the president of the Federal Reserve Bank of Dallas said that Fed's Fisher said that "QE was a massive gift intended to boost wealth [92]."
Billionaires have admitted that they are the beneficiaries of QE. For example, billionaire hedge fund manager Stanley Druckenmiller said [93] the following about QE:
"This is fantastic for every rich person," he said Thursday, a day after the Fed's stunning decision to delay tightening its monetary policy. "This is the biggest redistribution of wealth from the middle class and the poor to the rich ever."
"Who owns assets—the rich, the billionaires. You think Warren Buffett hates this stuff? You think I hate this stuff? I had a very good day yesterday."
Druckenmiller, whose net worth is estimated at more than $2 billion, said that the implication of the Fed's policy is that the rich will spend their wealth and create jobs—essentially betting on "trickle-down economics."
"I mean, maybe this trickle-down monetary policy that gives money to billionaires and hopefully we go spend it is going to work," he said. "But it hasn't worked for five years."
And Donald Trump said [94]:
"People like me will benefit from this."
Economics professor Randall Wray writes [95]:
Thieves ... took over the whole economy and the political system lock, stock, and barrel. They didn't just blow up finance, they oversaw the swiftest transfer of wealth to the very top the world has ever seen.
Economics professor Michael Hudson says that the big banks are trying to make us all serfs [96].
Economics professor Steve Keen says [96]:
"This is the biggest transfer of wealth in history", as the giant banks have handed their toxic debts from fraudulent activities to the countries and their people.
Money "Creation" Stuffs Bankers' Pockets with Money
The advent of central banks hasn't changed this formula. Specifically, the big banks ("primary dealers") loan money to the Fed, and charge interest for the loan [97].
the banking system is founded upon the counter-intuitive but indisputable fact that banks create loans first, and then create deposits later [98].
In other words, virtually all money is actually created as debt. For example, in a hearing held on September 30, 1941 in the House Committee on Banking and Currency, the Chairman of the Federal Reserve (Mariner S. Eccles) said:
That is what our money system is. If there were no debts in our money system, there wouldn't be any money.
And Robert H. Hemphill, Credit Manager of the Federal Reserve Bank of Atlanta, said:
If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial Banks. Someone has to borrow every dollar we have in circulation, cash or credit. If the Banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless position is almost incredible, but there it is. It is the most important subject intelligent persons can investigate and reflect upon. It is so important that our present civilization may collapse unless it becomes widely understood and the defects remedied very soon.
Debt (from the borrower's perspective) owed to banks is profit and income from the bank's perspective. In other words, banks are in the business of creating more debt ... i.e. finding more people who want to borrow larger sums.
Debt is central to our banking system. Indeed, Federal Reserve chairman Greenspan was so worried that the U.S. would pay off it's debt, that he suggested [99] tax cuts for the wealthy to increase the debt.
The big banks ("primary dealers") loan money to the Fed, and charge interest for the loan [97]. This is in contrast [100] to what the Founding Fathers intended [101], and a massive redistribution of wealth ... unnecessarily transferring extra money on every loan to the big primary dealers.
Lawlessness Is a Core Cause of Inequality
Joe Stiglitz said [102]:
Inequality is not inevitable. It is not ... like the weather, something that just happens to us. It is not the result of the laws of nature or the laws of economics. Rather, it is something that we create, by our policies, by what we do.
We created this inequality—chose it, really—with [bad] laws ...
Conservative Ron Paul points out that the system is rigged for the rich and against the poor and the middle class:
We asked the top regulator and prosecutor during the S&L crisis, who obtained over 1,000 felony convictions for major white collar fraud – professor of law and economics, Bill Black – what are the core causes of inequality. Professor Black told Washington's Blog:
The industry that is the largest single driver of surging income inequality is finance. Finance dramatically increases inequality through three primary means. The obvious means is the massive flow of profits out of the productive sector and into finance, particularly compensation for finance elites. We know that a very large amount of that compensation is the product of the "sure thing" of accounting control fraud. They have been able to lead the fraud epidemics with absolute impunity. No Wall Street elite officer who led the frauds that caused the crisis has ever been prosecuted. [Background [103].] There are virtually no cases of "claw backs" from the C-suite perpetrators' compensation even when it is now inescapable that the "income" they reported to "earn" their bonuses were lies and they were actually creating horrific losses.
The second means is that the three most destructive epidemics of financial fraud in history caused our financial crisis and hyper-inflated the bubble. This too was a "sure thing" because of the fraud "recipe." The household sector's wealth loss was over $11 trillion. Over 10 million Americans lost their jobs. The productivity loss is estimated at over $21 trillion. Each of these actions caused a vast loss of wealth suffered disproportionately by the 99%.
Third, finance, even absent fraud, is a major cause of increasing inequality. It is the means of tax evasion, which is (in $ terms) a crime that is all about the 1%, hedge funds, and large corporations. It is also the means, and the excuse, for outsourcing American jobs in the productive sector and extorting domestic tax giveaways by putting U.S. states and cities in competition to induce them to locate in a particular city.
In the savings and loan debacle we sought to remove all the proceeds of fraud from the guilty elites.
Indeed, the big banks continue to manipulate every market [104] and commit crime after crime [105] and ... and profit handsomely from it, while law-abiding citizens slide further and further behind [102].
Yet Obama is prosecuting fewer financial crimes than Bush, or his father, or Ronald Reagan [106]. Indeed, the government has actively covered up for – and encouraged [107] – criminal fraud [108].
Indeed, there are two systems of justice in America [109] ... one for the big banks and other fatcats [110], and one for everyone else [111].
Holding the little guy to the letter of the law – while letting the fatcats run around immune to the law [112]- is making inequality much worse.
Black points out that we should claw back ill-gotten gains [113] from criminals under well-established fraud principles. Specifically, the government could use existing laws to force ill-gotten gains to be disgorged [114] (see this [115] and this [116]) and fraudulent transfers to be voided.
Economist Michael Hudson also criticizes [117] Piketty for failing to address crime and fraud as core causes of inequality:
The other thing that is left out of the income tax statistics is of course how fortunes are really made, and that's crime and fraud. The good thing about Piketty is he points out, why is it that French novelists and English novelists tell you much more about wealth than economics? And he points out that in the 19th century novels by Jane Austen and Balzac, the way to make a fortune is to marry into it. That's true, but what Balzac also said is that behind every fortune is a great theft.
Government Subsidies to the Biggest Fatcats
The government shovels mass quantities of money to giant corporations through direct and indirect subsidies.
This includes subsidies to:
• The giant banks [70]
• Defense contractors [118]
• Participants in the failed drug war [119]
• The nuclear industry [120]
• And other already-wealthy recipients [83]
Why You're Paying Too Much In Taxes Today: Because the Ultra-Rich Pay Nothing ... Or Get Tax Refunds
The big boys use loopholes – including claiming their profits in foreign countries – to pay little or no taxes .. or to get tax refunds [121].
The middle class gets saddled with a heavier tax burden because the richest avoid taxes.
Government Creation of Monopolies
Wikipedia notes [122]:
A better explainer of growing inequality, according to Stiglitz, is the use of political power generated by wealth by certain groups to shape government policies financially beneficial to them. This process, known to economists as rent-seeking [123], brings income not from creation of wealth but from "grabbing a larger share of the wealth that would otherwise have been produced without their effort"
Rent seeking is often thought to be the province of societies with weak institutions and weak rule of law, but Stiglitz believes there is no shortage of it in developed societies such as the United States. Examples of rent seeking leading to inequality include
• the obtaining of public resources by "rent-collectors" at below market prices (such as granting public land to railroads [124], or selling mineral resources for a nominal price in the US),
• selling services and products to the public at above market prices (medicare drug benefit [125] in the US that prohibits government from negotiating [126] prices of drugs with the drug companies, costing the US government an estimated $50 billion or more per year),
• securing government tolerance of monopoly power (The richest person in the world in 2011, Carlos Slim, controlled Mexico's newly privatized telecommunication industry).
(Background here [127], here [96] and here [128].)
Stiglitz says [129]:
One big part of the reason we have so much inequality is that the top 1 percent want it that way. The most obvious example involves tax policy .... Monopolies and near monopolies have always been a source of economic power—from John D. Rockefeller at the beginning of the last century to Bill Gates at the end.
Government creates monopolies even in the U.S. [130] (and see below regarding government creation of the too big to fail banks.)
War Makes Us Poor ... But Makes Fatcats Richer Quicker
War makes the bankers and executives in defense companies [131]rich.
But – contrary to a long-standing myth – it makes the rest of us [132] poor.
As such, war is a major cause of inequality.
Over-Financialization
When a country's finance sector becomes too large finance, inequality rises. As Wikipedia notes [133]:
[Economics professor] Jamie Galbraith argues that countries with larger financial sectors have greater inequality, and the link is not an accident.
Government policy has been encouraging the growth of the financial sector for decades:
And see this [134].
Economist Steve Keen has also shown that "a sustainable level of bank profits appears to be about 1% of GDP", and that higher bank profits leads to a ponzi economy and a depression [135].
The government is largely responsible for this over-financialization. For example, MIT economics professor and former IMF chief economist Simon Johnson points out that the government created the giant banks [136], and they were not the product of free market competition.
Inequality Started Soaring When Nixon Took Us Off the Gold Standard
The New York Sun notes [137] that inequality started soaring in 1971 ... the same year [138] that Nixon took the U.S. off of the gold standard. The Sun shows the following chart from Piketty's book:
[139]Zero Hedge emphasizes [140] the inflection point:
Money Being Sucked Out of the U.S. Economy ... But Big Bucks Are Being Made Abroad
Part of the widening gap is due to the fact that most American companies' profits are driven by foreign sales and foreign workers [141]. As AP noted [142] in 2010:
Corporate profits are up. Stock prices are up. So why isn't anyone hiring?
Actually, many American companies are — just maybe not in your town. They're hiring overseas, where sales are surging and the pipeline of orders is fat.
***
The trend helps explain why unemployment remains high in the United States, edging up to 9.8% last month, even though companies are performing well: All but 4% of the top 500 U.S. corporations reported profits this year, and the stock market is close to its highest point since the 2008 financial meltdown.
But the jobs are going elsewhere. The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S. The additional 1.4 million jobs would have lowered the U.S. unemployment rate to 8.9%, says Robert Scott, the institute's senior international economist.
"There's a huge difference between what is good for American companies versus what is good for the American economy," says Scott.
***
Many of the products being made overseas aren't coming back to the United States. Demand has grown dramatically this year in emerging markets like India, China and Brazil.
Government policy has accelerated the growing inequality. It has encouraged American companies to move their facilities, resources and paychecks abroad [141]. And some of the biggest companies in America have a negative tax rate [143] ... that is, not only do they pay no taxes, but they actually get tax refunds.
(And a large percentage of the bailouts [144] actually went to foreign banks (and see this [145]). And so did a huge portion of the money from quantitative easing [146]. More here [147] and here [89].)
Conclusion: Piketty Is Rickety On Government Complicity
The bottom line is that Piketty has done a great job of documenting the extent of inequality, and some of its causes. But he misses the degree to which bad government and central bank policy is responsible.
Quote
The Second Biggest Delusion In US Culture
Submitted by James H. Kunstler of Kunstler.com [6],
The debate over Thomas Piketty's new book Capital in the Twenty-First Century is as dumb as every other issue-set in the public arena these days — a product of failed mental models, historical blindness, hubris, and wishful thinking. Piketty's central idea is that wealth will continue to accumulate and concentrate among individual rich families at ever-greater rates and therefore that nation-states should take a number of steps to prevent that from happening or at least attempt to correct it.
The first mistake of Piketty fans such as New York Times op-ed ass Paul Krugman is the assumption that the dynamic labeled "capitalism" is an ism, a belief system that you can subscribe to or drop out of, depending on your political correctitude. That's just not true. So-called capitalism is more like gravity, a set of laws that apply to and describe the behavior of surplus wealth, in particular wealth generated by industrial societies, which is to say unprecedented massive wealth. The human race never saw anything quite like it before. It became both a moral embarrassment and a political inconvenience. So among the intellectual grandiosities of modern times is the idea that this massive wealth can be politically managed to produce an ideal equitable society — with no side effects.
Hence, the bold but hapless 20th century experiment with statist communism, which pretended to abolish wealth but succeeded mainly in converting wealth into industrial waste and pollution, while directing the remainder to a lawless gangster government elite that ruled an expendable mass peasantry with maximum cruelty and injustice.
In the other industrial nations, loosely called "the west," the pretense to abolish wealth altogether never completely took, but a great deal of wealth was "socialized" for the purpose of delivering public goods. That seemed to work fairly well in post-war Europe and a bit less-well in the USA after the anomalous Eisenhower decade when industrial labor enjoyed a power moment of wage arbitrage. Now that system is unraveling, and for the reason that Piketty & Company largely miss: industrial economies are winding down with the decline of cheap fossil fuels.
Piketty and his fans assume that the industrial orgy will continue one way or another, in other words that some mysterious "they" will "come up with innovative new technologies" to obviate the need for fossil fuels and that the volume of wealth generated will more or less continue to increase. This notion is childish, idiotic, and wrong. Energy and technology are not substitutable with each other. If you run out of the former, you can't replace it with the latter (and by "run out" I mean get it at a return of energy investment that makes sense). The techno-narcissist Jeremy Rifkins and Ray Kurzweils among us propound magical something-for-nothing workarounds for our predicament, but they are just blowing smoke up the collective fundament of a credulous ruling plutocracy. In fact, we're faced with an unprecedented contraction of wealth, and a shocking loss of ability to produce new wealth. That's the real "game-changer," not the delusions about shale oil and the robotic "industrial renaissance" and all the related fantasies circulating among a leadership that checked its brains at the Microsoft window.
Of course, even in a general contraction wealth will still exist, and Piketty is certainly right that it will tend to remain concentrated (where it isn't washed away in the deluge of broken promises to pay this and that obligation). But he is quite incorrect that the general conditions we enjoy at this moment in history will continue a whole lot longer — for instance the organization of giant nation-states and their ability to control populations. I suppose it's counter-intuitive in this moment of the "Deep State" with all its Orwellian overtones of electronic surveillance and omnipotence, but I'd take the less popular view that the Deep State will choke to death on the diminishing returns of technology and that nation-states in general will first degenerate into impotence and then break up into smaller units. What's more, I'd propose that the whole world is apt to be going medieval, so to speak, as we contend with our energy predicament and its effects on wealth generation, banking, and all the other operations of modern capital. That is, they'll become a lot less modern.
As all this occurs, some families and individuals will hang onto wealth, and that wealth is apt to increase, though not at the scales and volumes afforded by industrial activities. Political theorizing a la Marx or Thomas Piketty is not liable to deprive them of it, but other forces will. The most plausible framework for understanding that is the circulation of elites. This refers to the tendency in history for one ruling elite to be overturned and replaced by another group, often by violence, and then become the new ruling elite. It always happens one way or another, and even the case of the Bolsheviks in Russia during the industrial 20th century can be seen this way.
In any case, just because human affairs follow certain patterns these days, don't assume that all these patterns will persist. I doubt that the Warren Buffets and Jamie Dimons of the world will see their wealth confiscated via some new policy of the Internal Revenue Service — e.g. the proposed "tax on wealth." Rather, its more likely that they'll be strung up on lampposts or dragged over three miles of pavement behind their own limousines. After all, the second leading delusion in our culture these days, after the wish for a something-for-nothing magic energy rescue remedy, is the idea that we can politically organize our way out of the epochal predicament of civilization that we face. Piketty just feeds that secondary delusion.
Quote from: Sheilbh on April 28, 2014, 03:10:37 PM
Quote from: Oexmelin on April 28, 2014, 12:30:59 PM
Goldhammer is an amazing translator. I doubt he introduced such distortion.
And he has a great blog on French politics:
http://artgoldhammer.blogspot.co.uk/
Interesting foreign view, thanks. :)
Quote from: Admiral Yi on April 28, 2014, 04:56:40 PM
What exactly do you mean by asserting exclusive possession?
Am I asserting exclusive possession of bank account? Of the clothes I'm wearing?
Juridically no, but in common speaking one often talks that way.
I think what may be bothering you is the implication he is talking about appropriation by a person vis-a-vis another person. As I read it, he isn't. He is talking about appropriation vis-a-vis "nature" such that pure natural bounty becomes countable as private wealth (capital).
Quote from: grumbler on April 28, 2014, 04:56:58 PM
Quote from: Jacob on April 28, 2014, 03:28:52 PM
In a sense, it is the mirror image of your complaint about "appropriation" (if I understood you correctly), which does have a whiff of illegitimacy about it.
Appropriation has a whiff of compulsion about it; by definition, it is taking against the wishes of the prior possessor or user. It could be perfectly legitimate, though. I can appropriate land, or art, or anything that belongs to me and which I used to allow unlimited access to, and control that access.
Yeah, fair enough.
Quote from: The Minsky Moment on April 29, 2014, 10:19:08 AM
Juridically no, but in common speaking one often talks that way.
I think what may be bothering you is the implication he is talking about appropriation by a person vis-a-vis another person. As I read it, he isn't. He is talking about appropriation vis-a-vis "nature" such that pure natural bounty becomes countable as private wealth (capital).
I still don't understand what kinds of things he's referring to. Like extensions of mineral rights in the sea bed? Those are done by governments, not unilaterally by individuals.
And you certainly have to agree that the term makes no sense in the context of that one sentence quoted in the OP.
Quote from: citizen k on April 28, 2014, 07:08:13 PM
QuotePiketty and his fans assume that the industrial orgy will continue one way or another, in other words that some mysterious "they" will "come up with innovative new technologies" to obviate the need for fossil fuels and that the volume of wealth generated will more or less continue to increase. This notion is childish, idiotic, and wrong. Energy and technology are not substitutable with each other. If you run out of the former, you can't replace it with the latter (and by "run out" I mean get it at a return of energy investment that makes sense). The techno-narcissist Jeremy Rifkins and Ray Kurzweils among us propound magical something-for-nothing workarounds for our predicament, but they are just blowing smoke up the collective fundament of a credulous ruling plutocracy. In fact, we're faced with an unprecedented contraction of wealth, and a shocking loss of ability to produce new wealth.
I've read enough of the book to know that this is totally wrong as a criticism of Piketty's argument. It is pretty obvious this guy hasn't read the book, just the reviews. For the sake of exposition Piketty does tenatively project a moderate growth rate for the next 80 years of about 1.2 per cent per capita globally. That is IMO a very reasonable and probably conservative assumption given that present rates are much higher now. However, Piketty points out that the growth rate could be much lower - and cites both to Robert Gordon's argument of technological staganation and to the potential difficulties in transitioning from fossil fuels mentioned here. In fact, his conclusions about inequality would be
strengthened if one assumes lower or stagnant growth. The only growth related scenario that would be inconsistent with his argument is a radical acceleration of growth in the developed world.
Quote from: Admiral Yi on April 29, 2014, 10:26:25 AM
I still don't understand what kinds of things he's referring to. Like extensions of mineral rights in the sea bed? Those are done by governments, not unilaterally by individuals.
An example would be if a surveyor found gold or oil underneath a piece of land. The wealth of the landowner would instantly increase.
The increase in that wealth would not be the consequence of any investment or action by the landowner, and it would occur even if the landowner took no action to extract the resources. it would simply occur because of the assignment of the value of the natural resource to the landowner. Piketty is making a semantic distinction between those two concepts to reflect the reality that some economists view them as conceptually distinct.
The distinction doesn't turn on the private character of the appropriation. If the discovery occurred in a country where all sub-surface rights are owned by the state there still would be appropriation - it would just be public appropropriation, not private.
QuoteAnd you certainly have to agree that the term makes no sense in the context of that one sentence quoted in the OP.
Agreed the usage is different in that passage. Perhaps it will make more sense when I get there.
If that's the case I repeat my objection to the term appropriate. Discovery of metals or oil under your property isn't an act of appropriation. Those rights are assigned when the property is purchased.
Quote from: Admiral Yi on April 29, 2014, 12:57:40 PM
If that's the case I repeat my objection to the term appropriate. Discovery of metals or oil under your property isn't an act of appropriation. Those rights are assigned when the property is purchased.
If I understand what Minsky is recounting of the argument, Piketty is talking about the transfer of value into the whole system of the economy.
Undiscovered resources are not accounted for in the valuation of either the wealth of the notional owner of the resource (because we don't know it's there, and there might not even be an owner) or in the valuation of the economy as a whole.
When the resource is discovered, whoever owns the rights to it sees an increase in wealth; similarly, the value of the whole economy goes up as the value of the newly discovered resource is added on to the whole value.
Piketty uses the term "appropriation" to describe laying claim to this new, previously unaccounted for (or possibly not even existing) value and bringing it into the economy. "Buying" is not an appropriate term, because it leaves out the most important factor of the process, which is the additional, previously non-existent, value accrued to the owner and the economy as a whole; nor is "creating value" appropriate, because the owner of the new value hasn't created it.
For example, imagine Elon Musk's private space flight shenanigans lead to manned missions to Mars. There they find deposits of unobtanium, and Musk's corporation (and partners and competitors) bring it back, profiting by trillions and trillions of dollars (and growing the economy as a result). Eventually (before or after the initial exploitation of the unobtanium resources) a legal framework for the managing and trading of the exploitation rights of unobtanium is created. Maybe Musk ends up claiming the rights, maybe competitors do, maybe oligarchs or state actors do; but in the end, someone sees a big increase in their wealth by rightfully owning the rights to all of this previously unknown and unaccounted for resource. Musk - or whoever else ends up owning this increased value - certainly didn't buy it, nor did they create it; but they own it and they are much wealthier for it.
This is the process which Piketty calls "appropriation". I see your objection to the term, but I don't think "buying" is accurate either. "Claiming" is probably as problematic as "appropriate"; can you suggest another term that's accurate, but more acceptable?
Quote from: Admiral Yi on April 29, 2014, 12:57:40 PM
If that's the case I repeat my objection to the term appropriate. Discovery of metals or oil under your property isn't an act of appropriation. Those rights are assigned when the property is purchased.
Where is the purchase you keep referring to? You are assuming a transaction which may not exist or is superfluous to the distinction even if it does.
So if the movie The Core is correct, there are huge chunks of diamond in the Earth's core. If I claim one of them, can I boost GDP by a trillion dollars next year?
Quote from: Jacob on April 29, 2014, 01:51:10 PM
Quote from: Admiral Yi on April 29, 2014, 12:57:40 PM
If that's the case I repeat my objection to the term appropriate. Discovery of metals or oil under your property isn't an act of appropriation. Those rights are assigned when the property is purchased.
If I understand what Minsky is recounting of the argument, Piketty is talking about the transfer of value into the whole system of the economy.
I haven't gotten far enough to see exactly what he is doing yet. But he does identify as a fundamental "law" the tendency of the capital/income ratio to equalize to the net national savings rate divided by the growth rate. That "law" may not hold, however, if a signficant part of national capital consists of purely natural resources. In that case, capital (wealth) can be quite high even if savings rates remain low. The relevance of that point is to be addressed in a chapter I haven't reached yet. But the distinction apparently is relevant to the argument in some way.
Quote from: MadImmortalMan on April 29, 2014, 01:59:12 PM
So if the movie The Core is correct, there are huge chunks of diamond in the Earth's core. If I claim one of them, can I boost GDP by a trillion dollars next year?
If you bring it out and sell it (and diamond prices don't plummet due to flooding the market, which is unlikely given the cartel nature of the diamond trade) and get to keep the profits, yes?
If you claim it, can't bring the diamond chunks out, but are able to trade the future exploitation rights for however much money then similarly yes.
... is this a confusing concept? :huh:
Quote from: MadImmortalMan on April 29, 2014, 01:59:12 PM
So if the movie The Core is correct, there are huge chunks of diamond in the Earth's core. If I claim one of them, can I boost GDP by a trillion dollars next year?
The act of claiming is irrelevant. That is what Yi keeps getting hung up about. If resources are known to exist and are recoverable they can boost wealth (NOT GDP). I.e. if a huge oil field is discovered in Nebraska and it is economically feasible to drill than wealth (and capital under Piketty's broad definition) increases. This is true whether the field is on public land, or private land, or under an Indian reservation, it is true regardless of what the property rights scheme in Nebraska happens to be about subsurface rights, it is true regardless whether the land was purchased, or seized by conquest, or given away. The accounting process by which purely natural resoruces are added to the total quantity of measured wealth is what is called appropriation.
Quote from: The Minsky Moment on April 29, 2014, 02:04:18 PM
I haven't gotten far enough to see exactly what he is doing yet. But he does identify as a fundamental "law" the tendency of the capital/income ratio to equalize to the net national savings rate divided by the growth rate. That "law" may not hold, however, if a signficant part of national capital consists of purely natural resources. In that case, capital (wealth) can be quite high even if savings rates remain low. The relevance of that point is to be addressed in a chapter I haven't reached yet. But the distinction apparently is relevant to the argument in some way.
I'm looking forward to you getting there, and hope you come back to tell us how it's relevant. I find the subject very interesting, but am honestly unlikely to read the book in the foreseeable future, so this digest recounting and discussion is greatly appreciated :cheers:
Quote from: MadImmortalMan on April 29, 2014, 01:59:12 PM
...The Core ...
I counted Armageddon as the worst movie I had ever seen until I saw this one.
I agree that appropriation would be a reasonable term to describe Elon Musk mining unobtanium on Mars (although I think "laying claim to" would be more accurate and more neutral). But the book is describing historical, real-world events. It also describes a period after the age of colonization and the charting of unmapped territory. Where is there unassigned underground wealth that one could "assert a right to" or "appropriate" if one were so inclined?
John Locke, Communist.
QuoteSec. 29. By making an explicit consent of every commoner, necessary to any one's appropriating to himself any part of what is given in common, children or servants could not cut the meat, which their father or master had provided for them in common, without assigning to every one his peculiar part. Though the water running in the fountain be every one's, yet who can doubt, but that in the pitcher is his only who drew it out? His labour hath taken it out of the hands of nature, where it was common, and belonged equally to all her children, and hath thereby appropriated it to himself.
Communists. :x
Quote from: Admiral Yi on April 29, 2014, 02:37:40 PMWhere is there unassigned underground wealth that one could "assert a right to" or "appropriate" if one were so inclined?
I don't know where the next new large scale source of previously unaccounted value is going to come from. Natural resources are mostly accounted for, and are an example and from the past. A more recent and, I think, still evolving creation of hitherto unassigned wealth is the monetization of information - things like selling mailing on a small scale, and the rise of the concept of intellectual property on a larger scale including attempts to patent the genetic structure of naturally occurring organisms - is a recent example of value being appropriated/claimed from something that was previously not an explicit source of it.
And Piketty's point (or more likely one of his points) is, I believe, that Capital tends to gain (appropriate/ claim) a larger share of new value as it's "brought on-line". It was the various East Asia Companies and their ilk who gained the most from the age of exploration; it's the various corporations with their patents and copyrights and lawyers who gain the most value from information and knowledge becoming ownable and explicitly part of the economy.
What's the next big source of value? I don't know; if I did we - as a society - would already be in the process of appropriating it (with the largest share going to Capital, if Piketty is right).
Quote from: Admiral Yi on April 29, 2014, 12:57:40 PM
If that's the case I repeat my objection to the term appropriate. Discovery of metals or oil under your property isn't an act of appropriation. Those rights are assigned when the property is purchased.
Your example can only be correct in a jurisidiction where the law recognized the ownership of subsurface rights and surface rights as equivalent. That is not the case in every jurisdiction. And even if it were the case that every jurisdiction had the same understanding of subsurface rights those rights could be accessed in a number of ways that do not require a purchase. I suspect the concept JR is describing is more broad than your concept of a "purchase".
Quote from: Jacob on April 29, 2014, 03:33:03 PM
I don't know where the next new large scale source of previously unaccounted value is going to come from. Natural resources are mostly accounted for, and are an example and from the past. A more recent and, I think, still evolving creation of hitherto unassigned wealth is the monetization of information - things like selling mailing on a small scale, and the rise of the concept of intellectual property on a larger scale including attempts to patent the genetic structure of naturally occurring organisms - is a recent example of value being appropriated/claimed from something that was previously not an explicit source of it.
And Piketty's point (or more likely one of his points) is, I believe, that Capital tends to gain (appropriate/ claim) a larger share of new value as it's "brought on-line". It was the various East Asia Companies and their ilk who gained the most from the age of exploration; it's the various corporations with their patents and copyrights and lawyers who gain the most value from information and knowledge becoming ownable and explicitly part of the economy.
What's the next big source of value? I don't know; if I did we - as a society - would already be in the process of appropriating it (with the largest share going to Capital, if Piketty is right).
So we're not talking about oil and minerals any more. I feel like I'm trying to hit a moving target.
Quote from: Admiral Yi on April 29, 2014, 05:41:52 PMSo we're not talking about oil and minerals any more. I feel like I'm trying to hit a moving target.
It feels to me that you're getting too focused on the "oil and minerals" bit; they are simply an example of something previously outside of the economy because it was unknown and unowned, or because it was thought worthless and unowned. The question is: once it becomes valuable, who benefits? Determining that is the process Piketty calls "appropriation."
I this day and age the oil and minerals have already been appropriated; and where oil is undiscovered, there's an established procedure for allocating the resources (various schemes for exploration and exploitation rights).
Where you to raise the capital and connections to pay the right government and private interests to the right to search for oil somewhere in Siberia and exploit what you find, that act is - as you suggest - more properly described as "buying" (or equivalent). Piketty is not substituting the word "appropriation" here.
The appropriation process happened as we as a culture/ society/ species discovered discovered how useful (and valuable) all this oil lying around was, how to exploit it, and where we might find more of it. How is ownership of this thing no one previously cared about assigned? Who gets to profit from this hitherto ignored substance now that it turns out it is of great value? How do we value the potential of as of yet undiscovered oil deposits, now that we know they're worth something; and to whom does that value accrue? That process is what's described as "appropriation", and that process is the one which - according to Piketty, if I understood Minsky's summary of what he's read so far - tends to increase inequality in a capitalist system as Capital captures/ gets/ appropriates the largest proportion of the newly discovered value (whatever it is).
That sounds fine to me.
However that doesn't sound exactly like what Joan was describing. I.e. discovery of gold on your property.
Quote from: Admiral Yi on April 29, 2014, 06:57:32 PM
That sounds fine to me.
However that doesn't sound exactly like what Joan was describing. I.e. discovery of gold on your property.
That's what it sounded like to me. Either there was a break-down in communication between the two of you, or I misunderstood Joan's summary.
Alternately, of course, both of those are true :lol:
CdM gave me some incite into Yi's view of the world in the Prostitution thread. Everything meaningful for Yi involves a purchase of some sort.
The act of purchase is a profoundly sacred ritual in Yi's faith. As it is his part of his religion, I can accept and tolerate is peculiar practices. I am after all, a believer in multiculturalism :pope:.
Quote from: Admiral Yi on April 29, 2014, 06:57:32 PM
That sounds fine to me.
However that doesn't sound exactly like what Joan was describing. I.e. discovery of gold on your property.
It is taking possession of something, as opposed to taking ownership per se. If I collect all the rainfall on my land into a big pond, I have taken rain (which no one owns) into my possession (my neighbor can't take water out of my pond, even if he could do so without trespassing). Once I have used that water, and it drains off my property, it isn't possessed by me any more. But, it had value while I possessed it. I had appropriated it for my use, but I had never really 'owned' any of it. I hadn't bought it or received it or gained it or earned it. I've just appropriated it.
The word appropriate or appropriation appears in this context only 9 or 10 times in the entire book. I think this discussion is at risk of suggesting a far greater relevance to the argument than it actually is.
As I understand it, the substantive issue being addressed is that the unimproved value of land and natural resources is included in Piketty's definition of capital, even though the process by which such values are appropriated (it really does seem to be best single word to use) is quite different from the process by which other forms of capital are accumulated. The main reason he includes these values is simply because it is too hard to separate them out. That choice does have a significant but not critical ramification for his argument, because Piketty contends that there is a tendency for the capital/income ratio to equalize to the ratio between net national savings and real growth rates. One factor that can break that equation is the presence of large amounts of natural resources, because then very high levels of national wealth can coexist with relatively low rates of saving. So that is an exception to Piketty's "rule", albeit a limited one.
Allocation of natural resource endowments across countries are also relevant to his analysis of the dynamics of capital positions cross-country because of the practice of oil exporters creating sovereign wealth foundations funded from oil rents - thus allowing the accumulation of potentially substantial net foreign asset positions -- Piketty is of the view that while moderate net asset positions can be sustainable, historical experience suggests that very large positions become politically unsustainable absent some kind of colonial domination over the target country. The anti-Japan hysteria in the US during the latter half of the 1980s would be an example.
http://www.thenation.com/article/179337/thomas-piketty-and-millennial-marxists-scourge-inequality
About halfway through this, pretty interesting.
Quote from: Queequeg on May 02, 2014, 12:04:38 PM
http://www.thenation.com/article/179337/thomas-piketty-and-millennial-marxists-scourge-inequality
About halfway through this, pretty interesting.
Ideologue should definitely read it.
Watched an interview with Piketty on HuffPo. His English is rather poor, but he's eloquent enough.
http://bloggingheads.tv/videos/28998
Discussion with the translator.
Joan, you liking it?
QuoteOnly with this appropriate and justified rage can we hope for the type of reform that will one day break our system free from the corrupting grasp of the megabanks.
What's he talking about?
Well, the Fed threw money at "several billionaires and tens of multi-millionaires" [68], including billionaire businessman H. Wayne Huizenga, billionaire Michael Dell of Dell computer, billionaire hedge fund manager John Paulson, billionaire private equity honcho J. Christopher Flowers, and the wife of Morgan Stanley CEO John Mack
And the bank bailouts weren't a one-time thing in 2008. The government has been – continuously and massively – been bailout out the big banks for the last 6 years.
Indeed, virtually all of the banks profits comes from government bailouts [69]. A top banking analyst estimates that subsidies to the giant banks exceeds $780 billion dollars each year [70].
A study of 124 banking crises by the International Monetary Fund found that bailing out banks which are only pretending to be solvent – like most of the big American banks [71] – harms the economy [72]. So growth is slowed, while the richest fatcat bankers rake in the dough.
If accurate about the big banks being so insolvent without lots of government help then it's pretty scary for the financial future. It'll be as if the country hasn't made any progress in fixing the things that helped trash the economy and financial sector before, setting us up for more of the same and maybe sooner than later.
I'm close to the end of Part 3, which is the last part before he starts making proposals.
My initial reaction is that it is kind of a throwback to an older approach to doing economic work. He doesn't create a model or employ any standard theoretical construct. Rather, he sets forth some basic accounting identities and deploys a large mass of historical data on wealth and income. Most of the book consists of a review and analysis of the data, using very basic accounting concepts and simple equations to explicate the implications. To the extent economic theories are raised, it is usually to point out that they are either inconsistent with the data or insufficient to explain it.
One could say that is just using a fundamental scientific approach - i.e. collect empirical data, use it to test hypotheses, and try to come up with a consistent explanation. But that as sound as it seems to be, it has been an approach out of fashion since the 70s/80s, ever since Robet Lucas pointed out that empirical data from the past can't be a reliable guide for the future because any policy change can alter the behavior that gave rise to those relationships (the famous "Lucas Critique"). Since the Lucas Critque got traction in the 70s, the trend in macro work has been to create elaborate models and theoretical constructs that seem reasonable and build results off of that. However for lots of reasons that would take too long to get into that is an approach that raises a whole set of other problems and limitations. So Piketty's approach while old-fashioned is IMO refreshing.
The way that Piketty deals with Lucas is to be quite candid that the tendencies and relationships that he finds in the data are not ironclad rules at all but highly contingent, based on techology and socio-cultural arrangements and beliefs. For example, a bit part of the argument involves explaining the ramifications of the fact that the return on capital tends to exceed real growth over time. However, Piketty notes there is nothing inevitable about this outcome and indeed part of his argument is pointing out that there was a specific point in history where that did not happen. What is not clear to me given this presentation is how Piketty is going to be able to make policy suggestions given the complexities and contigencies he identifies.
Another issue is that it appears he does not attempt to elaborate any theory of profit. He notes that profit (return on capital) has been relatively stable over time as a mean, but he doesn't break down dispersion across time and he doesn't advance any theory that would explain the phenomenon. His response might well be that is beyond the scope of his study, but it doesn seem to me that if one is going to make policy proposals to address inequalities it is relevant and perhaps important to have an understanding of what is driving profit in the aggregate.
Another perhaps related lacunae is that at least so far Piketty hasn't addressed the impact of globalization and trade. One of the limitations of his data is the the lack of income deciles prior to 1900 (he does have and uses measures of wealth in the 19th century). Piketty suggests that inequality remained relatively stable over the 19th century, and actually grew over the latter part into 1913. However, Jeffrey Williamson has used wage/rent data that suggests that during the second half of the 19th century inequality actually moderated in western Europe (and increased in the US) due to trade and globalization, which caused real wages to increase relatively in labor intense countries and decrease relatively in land rich ones. Piketty doesn't cite this work in his otherwise voluminous notes (and may not have considered it). This arguably is a historical point but given the significance of globalized trade today it may be quite relevant for present concerns.
I meant "big" part not "bit" . . .
Quote
Forget the 700-plus-page Piketty 'socialism for all' tome; here is economics that everyone can understand.
http://thelittlebluebook.co.uk/ (http://thelittlebluebook.co.uk/)
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fwww.zerohedge.com%2Fsites%2Fdefault%2Ffiles%2Fimages%2Fuser3303%2Fimageroot%2F2014%2F06%2F20140619_eco1_0.jpg&hash=2ca88467ada6bfc71c5bc0e4b96b5b7be3015ba9)
They forgot about the bit that economic forecasting makes meteorology forecasting look scientific and respectable.
I have my copy to take on holiday. If all goes to plan I'll return red in every sense.
Will you cede the castle to the state?
Quote from: Sheilbh on June 19, 2014, 07:55:06 PM
I have my copy to take on holiday. If all goes to plan I'll return red in every sense.
Yeah right, Log Cabin.
Quote from: Ideologue on June 20, 2014, 03:46:51 AM
Quote from: Sheilbh on June 19, 2014, 07:55:06 PM
I have my copy to take on holiday. If all goes to plan I'll return red in every sense.
Yeah right, Log Cabin.
:o
Don't worry, the chances of Ide ever getting to lead a purge are about the same as his joining the Supreme Court.
Quote from: Sheilbh on June 20, 2014, 05:26:17 AM
Quote from: Ideologue on June 20, 2014, 03:46:51 AM
Quote from: Sheilbh on June 19, 2014, 07:55:06 PM
I have my copy to take on holiday. If all goes to plan I'll return red in every sense.
Yeah right, Log Cabin.
:o
Log castle? :P
Just busting your balls. I realize you just take a scholarly if enthusiastic interest in our right wing, not that you identify with them. If we were a Muslim country, it'd be positively orientalist. I'd call it Psellusesque, but I've never caught you breaking Republicans down into weird phenotypic categories and physically lusting over your favorites.
I'd be surprised if Sheilbh had any objection to cute Republican aide closet cases. :lol:
For an English gay papist, his weird thing about Mike Huckabee is even more disturbing than some of garbon's tastes.
Quote from: CountDeMoney on June 21, 2014, 12:19:41 AM
For an English gay papist, his weird thing about Mike Huckabee is even more disturbing than some of garbon's tastes.
What disturbing tastes do I have? :angry:
Quote from: garbon on June 21, 2014, 11:06:22 AM
Quote from: CountDeMoney on June 21, 2014, 12:19:41 AM
For an English gay papist, his weird thing about Mike Huckabee is even more disturbing than some of garbon's tastes.
What disturbing tastes do I have? :angry:
The color purple.
Quote from: The Brain on June 21, 2014, 11:10:09 AM
Quote from: garbon on June 21, 2014, 11:06:22 AM
Quote from: CountDeMoney on June 21, 2014, 12:19:41 AM
For an English gay papist, his weird thing about Mike Huckabee is even more disturbing than some of garbon's tastes.
What disturbing tastes do I have? :angry:
The color purple.
Alice Walker? :unsure:
Quote from: garbon on June 21, 2014, 11:30:58 AM
Quote from: The Brain on June 21, 2014, 11:10:09 AM
Quote from: garbon on June 21, 2014, 11:06:22 AM
Quote from: CountDeMoney on June 21, 2014, 12:19:41 AM
For an English gay papist, his weird thing about Mike Huckabee is even more disturbing than some of garbon's tastes.
What disturbing tastes do I have? :angry:
The color purple.
Alice Walker? :unsure:
She's black.
So is Obama and garbon doesn't like him.
Quote from: Peter Wiggin on June 21, 2014, 11:53:43 AM
So is Obama and garbon doesn't like him.
How could this possibly be relevant?
Quote from: Peter Wiggin on June 21, 2014, 11:53:43 AM
So is Obama and garbon doesn't like him.
Are you calling garbon a racist?
Quote from: The Brain on June 21, 2014, 12:03:21 PM
Quote from: Peter Wiggin on June 21, 2014, 11:53:43 AM
So is Obama and garbon doesn't like him.
How could this possibly be relevant?
You said he liked Walker because she's black. :P
Quote from: Peter Wiggin on June 21, 2014, 01:16:52 PM
Quote from: The Brain on June 21, 2014, 12:03:21 PM
Quote from: Peter Wiggin on June 21, 2014, 11:53:43 AM
So is Obama and garbon doesn't like him.
How could this possibly be relevant?
You said he liked Walker because she's black. :P
Sigh. Let me walk you through it. garbon famously likes to dye his hair purple. It is a truly disturbing taste, which made it an obvious example. I even specifically said that I was talking about the color. garbon mentioned Alice Walker, who of course isn't purple. This I pointed out.
That is one interpretation.
Quote from: Peter Wiggin on June 21, 2014, 01:22:05 PM
That is one interpretation.
You think garbon looks good in purple hair? Army of one.
Quote from: The Brain on June 21, 2014, 01:24:24 PM
Quote from: Peter Wiggin on June 21, 2014, 01:22:05 PM
That is one interpretation.
You think garbon looks good in purple hair? Army of one.
Emphasis mine. :)
Army of One? Sometimes one Peter Wiggin is all it takes?
(https://languish.org/forums/proxy.php?request=http%3A%2F%2F1.bp.blogspot.com%2F-YMWCTL_5i58%2FTjJ_Z6O6AnI%2FAAAAAAAAAJc%2FtrkouNLrjkY%2Fs1600%2Farmy_of_one_1992_580x865_188450.jpg&hash=45295816be89bc163e78e8b7dc403721b2fb5d4b)
I'm thinking of buying a boat and becoming a Navy of One instead.
Dolph should be president.
Quote from: The Brain on June 21, 2014, 01:20:13 PM
Sigh. Let me walk you through it. garbon famously likes to dye his hair purple. It is a truly disturbing taste, which made it an obvious example. I even specifically said that I was talking about the color. garbon mentioned Alice Walker, who of course isn't purple. This I pointed out.
I famously like to dye my hair a color that I've never dyed it? :unsure:
Quote from: garbon on June 21, 2014, 02:21:09 PM
Quote from: The Brain on June 21, 2014, 01:20:13 PM
Sigh. Let me walk you through it. garbon famously likes to dye his hair purple. It is a truly disturbing taste, which made it an obvious example. I even specifically said that I was talking about the color. garbon mentioned Alice Walker, who of course isn't purple. This I pointed out.
I famously like to dye my hair a color that I've never dyed it? :unsure:
Yes. Jesus famously rose from the dead.
But he did so I don't understand the connection. :hmm:
Brain probably thinks the disciples moved the body. :tinfoil:
Get a room.
Surfboard
Quote from: The Brain on June 21, 2014, 02:47:32 PM
Quote from: garbon on June 21, 2014, 02:39:54 PM
Quote from: The Brain on June 21, 2014, 02:37:40 PM
Quote from: garbon on June 21, 2014, 02:35:52 PM
But he did
:wacko:
:unsure:
You so crazy.
I think it comes from watching too much TV. Some people don't appear to understand that the TV zombie stories are all fiction, so they come away believing that the dead can come back to life.
So disrespectful.
Quote from: grumbler on June 22, 2014, 08:53:01 AM
I think it comes from watching too much TV. Some people don't appear to understand that the TV zombie stories are all fiction, so they come away believing that the dead can come back to life.
Next you'll tell us the grail is fiction too, and that your millennia of existence are due to good genes, diet and exercise. :rolleyes:
I don't think pants, parliament or the Catholic Church had much to do with it.
Are mutual funds behind the rise of the 1%? :hmm:
http://www.slate.com/articles/news_and_politics/view_from_chicago/2015/04/mutual_funds_make_air_travel_more_expensive_institutional_investors_reduce.single.html
Quote
Mutual Funds' Dark Side
Why airlines and other industries keep prices too high.
By Eric Posner and E. Glen Weyl
The great drama of our time is the rise of the 1 percent. Thomas Piketty has done more than anyone else to put this question on the public agenda. But while his book Capital in the Twenty-First Century documents the growth of inequality, he does not offer much of an explanation or a solution. He thinks that capitalism naturally favors investors over workers, and proposes as a remedy a global wealth tax, which no one thinks is feasible. Yet recent work by a brilliant young economist suggests that the problem is not capitalism per se, but the way our financial system is organized. The key to the problem—and to the solution—is the rise of the institutional investor.
Institutional investors are companies that own other companies. A familiar example is the mutual fund. A mutual fund owns shares of dozens or hundreds of companies. Many mutual funds pursue specific investment strategies; others just try to mimic the market or certain segments of the market. When you invest in a mutual fund, you indirectly invest in companies that supply goods and services, and obtain the benefits of diversification of investments without having to bother to manage your own portfolio. Other types of institutional investors include pension funds and hedge funds.
Mutual funds have a benign reputation. They make life easier for ordinary people who don't have the time, resources, or expertise to pick stocks. They are also thought to improve corporate governance. They have the resources to monitor the companies they own shares in, and they can put pressure on them if managers overpay themselves or engage in other bad behavior. And they are familiar: Nearly everyone with a 401(k) owns shares of a mutual fund.
Yet mutual funds have a dark side. José Azar, an economist now at Charles Rivers Associates, argued in his ingenious dissertation that mutual funds can reduce market competition and raise prices for consumers. The idea behind this argument dates to the late 19th century, another period of rapidly growing inequality. Back then, economists argued that firms can reduce competition in markets by buying up the firms that operate within them. At the time, the firms that bought up other firms were called "trusts" to conceal their monopolistic goals. They were broken up by progressive reformers after Congress passed the first major antitrust law, the Sherman Antitrust Act of 1890. Azar's insight—drawing on some other recent work by economists—was that modern institutional investors such as mutual funds are trusts in sheep's clothing.
In a new paper, Azar and co-authors Martin C. Schmalz and Isabel Tecu have uncovered a smoking gun. To test the hypothesis that institutional investors gain market power that results in higher prices, they examine airline routes. Although we think of airlines as independent companies, they are actually mostly owned by a small group of institutional investors. For example, United's top five shareholders—all institutional investors—own 49.5 percent of the firm. Most of United's largest shareholders also are the largest shareholders of Southwest, Delta, and other airlines. The authors show that airline prices are 3 percent to 11 percent higher than they would be if common ownership did not exist. That is money that goes from the pockets of consumers to the pockets of investors.
How exactly might this work? It may be that managers of institutional investors put pressure on the managers of the companies that they own, demanding that they don't try to undercut the prices of their competitors. If a mutual fund owns shares of United and Delta, and United and Delta are the only competitors on certain routes, then the mutual fund benefits if United and Delta refrain from price competition. The managers of United and Delta have no reason to resist such demands, as they, too, as shareholders of their own companies, benefit from the higher profits from price-squeezed passengers. Indeed, it is possible that managers of corporations don't need to be told explicitly to overcharge passengers because they already know that it's in their bosses' interest, and hence their own. Institutional investors can also get the outcomes they want by structuring the compensation of managers in subtle ways. For example, they can reward managers based on the stock price of their own firms—rather than benchmarking pay against how well they perform compared with industry rivals—which discourages managers from competing with the rivals.
Competition among mutual funds cannot substitute for competition among corporations. Consider two mutual funds, A and B, each of which owns substantial stakes in the airlines. Both A and B benefit when the airlines fail to compete because they share the airlines' above-market profits. The managers of A and B don't need to meet in a smoke-filled room in order to hatch a conspiracy. All they need to do is reward the airline managers if those managers make large profits.
One might argue that none of this matters. After all, a large fraction of ordinary households own shares of mutual funds, so they benefit from the bonanza. They pay higher airline prices out of one pocket, but their share of the above-market stock returns goes into the other. However, high-income people put much more of their money in mutual funds and stocks than ordinary people, who use most of their money to buy goods and services. So the profits mainly accrue to the rich, while the costs are paid by the middle class and poor. Moreover, the high prices lead to waste, as people who are able to pay market prices but not monopoly prices are deprived of goods and services. The institutional investors shrink the size of the market while giving the rich a larger share of what's left.
While Azar and his co-authors studied only the airline industry, there is good reason to think that their findings apply more broadly. As they point out, the investment management company BlackRock is the top shareholder of the three largest banks in the United States; BlackRock is also the largest shareholder of Apple and Microsoft. The companies that are the top five shareholders of CVS are also the top five shareholders of Walgreens. (And yes, one of them is BlackRock.) Institutional investors dominate the economy.
And this brings us back to Piketty. His famous U-shaped curve showed that inequality was high in the 19th century, fell during the middle of the 20th century, and then rose again over the last 40 years. The rise of the institutional investor coincides with this 40-year growth. The share of the stock market owned by institutional investors rose from about 5 percent after World War II to about 67 percent at the end of 2010. Thus, the two periods of high inequality correspond to the dominance of trusts at the end of the 19th century and the dominance of institutional investors toward the end of the 20th and beginning of the 21st centuries. We see the two as substitutes. Trusts and institutional investors are both devices for capitalists to monopolize the market at the expense of workers and consumers.
If all this is true, can anything be done about it? Absolutely. One question is whether the managers of institutional firms are directing the managers of the firms they own not to compete over price. If so, this is a violation of the antitrust laws, and the Department of Justice should investigate. But we suspect that nothing so obvious is going on. When all the people with the power over pricing share a common interest in raising prices, they don't need to enter conspiracies or even talk to one another.
Another approach would be for Congress to pass a law that restricts the holdings of mutual funds and other institutional investors. The law would be very simple. Currently, employees and employers get tax advantages when employers set up retirement accounts for employees. The government regulates the types of funds that employers may offer to their employees. The government should direct employers to offer only mutual funds that do not own a significant number of shares of more than one firm in a specific industry. In other words, mutual funds would be allowed to own shares of only a single firm in any specific industry, but could invest in as many industries as they wanted.
For example, a mutual fund could own shares in United or Delta or Southwest, but not more than one airline. The same mutual fund could also own shares in GM or Ford or Tesla, but not more than one car manufacturer. By owning shares in different industries, mutual funds could continue to offer the diversification benefits that investors value them for. But because mutual funds would not be allowed to own shares of firms in the same industry, they would have no incentive to encourage firms not to compete on price.
While our proposal might seem radical since it would indirectly require the mutual fund industry to reorganize itself, it should produce huge benefits for society. By reducing the monopolization of markets, it should lower prices for everyone. The returns to investors would decline, but their losses would be much less than the gains to society from the price reductions. And because low-income people are more sensitive to prices than rich people are, the proposal would help alleviate the high level of inequality. Just like the trust busters of the 19th century, we seek to save markets from themselves.
Slate.
My mutual funds haven't made me rich. :(
Oh fuck. Marti'll see the Piketty thread :o
That's an interesting viewpoint and it could be valid. But I'm not convinced that mutual funds alone causes the rise of the 1%. I think government taxation policy, globalisation, free trade, the rise of China and technology are much more important reasons.
When was in history, other than the brief post-WW2 timeframe, that the "1%" did not control the vast majority of available wealth?
Quote from: Tamas on April 17, 2015, 03:40:31 AM
When was in history, other than the brief post-WW2 timeframe, that the "1%" did not control the vast majority of available wealth?
What is your point?
QuoteThe great drama of our time is the rise of the 1 percent.
:D
Quote from: The Brain on April 17, 2015, 04:38:41 AM
QuoteThe great drama of our time is the rise of the 1 percent.
:D
Yeah. Aristocracy as a concept ninja-spawned on unsuspecting humanity in the 21st century.
Quote from: Razgovory on April 17, 2015, 04:20:19 AM
Quote from: Tamas on April 17, 2015, 03:40:31 AM
When was in history, other than the brief post-WW2 timeframe, that the "1%" did not control the vast majority of available wealth?
What is your point?
Yeah. If the argument is that something is acceptable today because it existed for the better part of human history, then the same goes for slavery, torture, lack of sanitation and illiteracy. In arguments like this there is a fine line between being a conservative and a reactionary.
Was Tamas making a statement about its acceptability?
QuoteThe great drama of our time is the rise of the 1 percent. Thomas Piketty has done more than anyone else to put this question on the public agenda. But while his book Capital in the Twenty-First Century documents the growth of inequality, he does not offer much of an explanation or a solution. He thinks that capitalism naturally favors investors over workers, and proposes as a remedy a global wealth tax, which no one thinks is feasible.
Sigh, yet another person claiming to have read Piketty's book and really only read the reviews about the book.
Quote from: Valmy on April 17, 2015, 07:55:23 AM
Was Tamas making a statement about its acceptability?
Probably. :hmm:
I thought he was saying the 1% dominating us peasants was not only not new it was the normal state of things.
Most people accept the normal state of things.
Quote from: Peter Wiggin on April 17, 2015, 02:20:59 PM
Most people accept the normal state of things.
The normal state of things makes Madame la Guillotine cry for blood.
In case some people want to keep up with Piketty's research:
http://equitablegrowth.org/research-analysis/economic-growth-in-the-united-states-a-tale-of-two-countries/
Quote from: Oexmelin on December 08, 2016, 06:03:34 PM
In case some people want to keep up with Piketty's research:
http://equitablegrowth.org/research-analysis/economic-growth-in-the-united-states-a-tale-of-two-countries/
I suppose there are a few potential lessons to take from this: 1) The US ought to do something to address this lack of growth at the bottom; 2) Better not fall into the bottom 50% of income earners.
Quote from: Oexmelin on December 08, 2016, 06:03:34 PM
In case some people want to keep up with Piketty's research:
http://equitablegrowth.org/research-analysis/economic-growth-in-the-united-states-a-tale-of-two-countries/
Thank you.
I will spend some time on that over the weekend.
538 has a nice article on this topic with some nifty charts
http://fivethirtyeight.com/features/inequality-is-killing-the-american-dream/
Fuck I posted about this years ago with that nice video showing how wealth was divided in America.
I remember the Yi's and such all being like "Yeah, that is cool"
QuotePolicies that could raise the pre-tax incomes of the bottom 50 percent of income earners could include:
Improved education and access to skills, which may require major changes in the system of education finance and admission
Reforms of labor market institutions to boost workers' bargaining power and including a higher minimum wage
Corporate governance reforms and worker co-determination of the distribution of profits
Steeply progressive taxation that affects the determination of pay and salaries and the pre-tax distribution of income, particularly at the top end
You know what else could raise the pre-tax incomes of the bottom 50 percent? Simply paying people more.
Fight for fifteen?
Really, the only solution is to make sure that you aren't in the bottom 50%.
Quote from: Monoriu on December 08, 2016, 08:27:33 PM
Really, the only solution is to make sure that you aren't in the bottom 50%.
Yeah but that just means you are not totally fucked. It is still kind of dicey until you get up into the top 10% or so.
Speaking of getting fucked I kind of got screwed when I sold my old house so I am working nights now to pay off 20K in foundation repairs I had to cough up. I first got a job delivering pizza and part of the freaking job application was applying for government benefits. I was like 'awesome we have all these people working full time and we STILL have to support them with our tax money.'
I actually rather enjoyed delivering pizza, about as brainless of a job you can find now that GPS on your phone exists, but my wife didn't like me working on Friday and Saturday nights so now I am working security at a church. All those evening 12 step people need to be kept from looting the place I guess.
Ow. Foundation repairs. :pinch:
I wonder how the graphs would look if the groups that seem to wallow their whole lives in poverty stricken cesspools were omitted (white trash, etc.)
Quote from: CountDeMoney on December 08, 2016, 08:06:09 PM
QuotePolicies that could raise the pre-tax incomes of the bottom 50 percent of income earners could include:
Improved education and access to skills, which may require major changes in the system of education finance and admission
Reforms of labor market institutions to boost workers' bargaining power and including a higher minimum wage
Corporate governance reforms and worker co-determination of the distribution of profits
Steeply progressive taxation that affects the determination of pay and salaries and the pre-tax distribution of income, particularly at the top end
You know what else could raise the pre-tax incomes of the bottom 50 percent? Simply paying people more.
We'd still have a bottom 50% though. :(
Quote from: LaCroix on December 08, 2016, 09:30:56 PM
I wonder how the graphs would look if the groups that seem to wallow their whole lives in poverty stricken cesspools were omitted (white trash, etc.)
Why would you omit them?
QuoteWe'd still have a bottom 50% though. :(
Of course we would, that's basic math. The issue is the condition of the bottom 50%, not that half the people will be below the middle point.
Quote from: Jacob on December 09, 2016, 12:15:51 AM
Why would you omit them?
He hates the people he went to high school with.
Quote from: Eddie Teach on December 09, 2016, 12:22:27 AM
Quote from: Jacob on December 09, 2016, 12:15:51 AM
Why would you omit them?
He hates the people he went to high school with.
Sure. But if the stats and discussion are about how people are not seeing any improvement in their economic outlook it seems kind of silly to say "how do the stats look if we ignore the people not seeing improvement in their economic outlook?"
QuoteTo understand how unequal the United States is today, consider the following fact. In 1980, adults in the top 1 percent earned on average 27 times more than bottom 50 percent of adults. Today they earn 81 times more. This ratio of 1 to 81 is similar to the gap between the average income in the United States and the average income in the world's poorest countries, among them the war-torn Democratic Republic of Congo, Central African Republic, and Burundi. Another alarming trend evident in this data is that the increase in income concentration at the top in the United States over the past 15 years is due to a boom in capital income. It looks like the working rich who drove the upsurge in income concentration in the 1980s and 1990s are either retiring to live off their capital income or passing their fortunes onto heirs.
I wonder how they managed to get this so wrong. I have it on excellent authority that the wealthy create jobs, they don't retire and live in luxury and make their kids rich.
Quote from: CountDeMoney on December 08, 2016, 08:06:09 PM
QuotePolicies that could raise the pre-tax incomes of the bottom 50 percent of income earners could include:
Improved education and access to skills, which may require major changes in the system of education finance and admission
Reforms of labor market institutions to boost workers' bargaining power and including a higher minimum wage
Corporate governance reforms and worker co-determination of the distribution of profits
Steeply progressive taxation that affects the determination of pay and salaries and the pre-tax distribution of income, particularly at the top end
You know what else could raise the pre-tax incomes of the bottom 50 percent? Simply paying people more.
Pffft. If everyone on the bottom starts earning more, they will still be in the bottom.
It's like this thing I saw on Facebook - that nowhere in the States can you afford a 2 bed apartment from minimum wage, hinting that raising minimum wages would solve this.
Well it wouldn't. I am assuming there are no masses of empty big apartments held empty because people can't afford the stone-written fixed rent price. So if all poor people start earning more, that will be great for owners of two bedroom apartments as people competing for their property will have more money to offer so it's their family who can live in humane conditions instead of an other poor schmuck's. For this particular problem the solution would be increasing supply, not demand.
Quote from: Tamas on December 09, 2016, 02:02:02 AM
Quote from: CountDeMoney on December 08, 2016, 08:06:09 PM
QuotePolicies that could raise the pre-tax incomes of the bottom 50 percent of income earners could include:
Improved education and access to skills, which may require major changes in the system of education finance and admission
Reforms of labor market institutions to boost workers' bargaining power and including a higher minimum wage
Corporate governance reforms and worker co-determination of the distribution of profits
Steeply progressive taxation that affects the determination of pay and salaries and the pre-tax distribution of income, particularly at the top end
You know what else could raise the pre-tax incomes of the bottom 50 percent? Simply paying people more.
Pffft. If everyone on the bottom starts earning more, they will still be in the bottom.
Is anyone even reading what people post or what these articles are saying?
It isn't some brilliant revelation that by the definition of what a percentage means, there will always be a "lowest 50%".
What is the purpose behind stating things that are definitionally true, and have absolutely NOTHING to do with the discussion?
The original article is from 2014 Ffs. I just reacted to CdM's argument for a higher minimum wage. Chillax and go to sleep :p
Thing is, they're not only competing with other people on the bottom. That apartment complex could be a golf course instead.
Quote from: Tamas on December 09, 2016, 02:07:13 AM
The original article is from 2014 Ffs. I just reacted to CdM's argument for a higher minimum wage. Chillax and go to sleep :p
Meh, I'm not even arguing for a higher minimum wage, even though that would help the particularly low end sectors.
Just increasing wages along a long enough timeline would help, even if it's a barely perceptible yearly increase--somebody making the exact same salary now that they were 6 years ago is not helping the economy as the economy burns past them, it just provides Yi's whacking material. You want to eliminate positions to save a buck, fine. Be a dick. But don't eliminate a position for $35,000 and then stack it on top of another position, just for the benefit of having someone perform two jobs.
Those kinds of factors are just as impactful as increasing the minimum wage.
Quote from: Jacob on December 09, 2016, 12:15:51 AM
Quote from: LaCroix on December 08, 2016, 09:30:56 PM
I wonder how the graphs would look if the groups that seem to wallow their whole lives in poverty stricken cesspools were omitted (white trash, etc.)
Why would you omit them?
to see how the average incomes look after you remove maybe 20% of the bottom 50%. certain groups seem like they're going to remain in abject poverty and have no interest rising above it or moving. at least the ghettos are a few blocks from wealth.
Quote from: Tamas on December 09, 2016, 02:07:13 AM
The original article is from 2014 Ffs. I just reacted to CdM's argument for a higher minimum wage. Chillax and go to sleep :p
But your reaction isn't even a reaction to what he is saying. He didn't say raise their wages so they can afford a nicer apartment, or more importantly, so they can get out of the bottom 50%.
Quote from: Berkut on December 09, 2016, 08:33:22 AM
Quote from: Tamas on December 09, 2016, 02:07:13 AM
The original article is from 2014 Ffs. I just reacted to CdM's argument for a higher minimum wage. Chillax and go to sleep :p
But your reaction isn't even a reaction to what he is saying. He didn't say raise their wages so they can afford a nicer apartment, or more importantly, so they can get out of the bottom 50%.
True he shouldn't have said that first part.
I do think there is an issue with the simple statement of just raise their wages though, which is what Tamas has noted. Unless something is put in places to stop businesses/landlords, etc. from just raising prices now that more individuals have more money, you'll end up back in the same place. What we need is someway to have the ratio change in favour of employees.
If wages are raised, the ratio of money owned by employees (as opposed to stock owners) does go up.
Quote from: Eddie Teach on December 09, 2016, 08:49:59 AM
If wages are raised, the ratio of money owned by employees (as opposed to stock owners) does go up.
Not if prices go up at a similar pace.
Quote from: garbon on December 09, 2016, 08:52:55 AM
Quote from: Eddie Teach on December 09, 2016, 08:49:59 AM
If wages are raised, the ratio of money owned by employees (as opposed to stock owners) does go up.
Not if prices go up at a similar pace.
Prices are tied to inflation, which will go up at a slower rate. Not all the money in the economy is invested in wages.
Quote from: Eddie Teach on December 09, 2016, 08:56:20 AM
Quote from: garbon on December 09, 2016, 08:52:55 AM
Quote from: Eddie Teach on December 09, 2016, 08:49:59 AM
If wages are raised, the ratio of money owned by employees (as opposed to stock owners) does go up.
Not if prices go up at a similar pace.
Prices are tied to inflation, which will go up at a slower rate. Not all the money in the economy is invested in wages.
:huh:
I think even just a look at all the recent drug hiking scandals can demonstrate that a company can choose to increase prices.
Sure, companies can choose to raise prices anytime they want. Normally people will just buy from their competitors. In the case of drug companies with patents, people will just go without. But raising wages to a set amount or even raising wages across the board(which isn't what CDM was suggesting) by x% is not going to increase demand by x%.
Quote from: Eddie Teach on December 09, 2016, 09:16:02 AM
Sure, companies can choose to raise prices anytime they want. Normally people will just buy from their competitors. In the case of drug companies with patents, people will just go without. But raising wages to a set amount or even raising wages across the board(which isn't what CDM was suggesting) by x% is not going to increase demand by x%.
I'm assuming demand for basic life goods (like Tamas raised regarding housing) will still have similar levels of demand to which they have now.
So if supply and demand are both static, there is no reason for prices to go up.
Quote from: Eddie Teach on December 09, 2016, 09:28:06 AM
So if supply and demand are both static, there is no reason for prices to go up.
A desire for more profit? After all company profit margins will be going down if their employee costs increase.
Desire for profit is also a near-constant. ;)
Even if one stipulates that the company will raise prices to keep the same profit(which they'd have already done if the market would let them), labor costs are less than 100% of the company's expenditures. So the percentage they increase the price of their products is less than the percentage they increased the wages.
While of course it is important to understand the knock on effects, the basic argument that we should continue to pay poor people a continually declining share of the wealth because it just won't do them any good to let them have a greater share (or maybe we aren't exactly sure how much them having more wealth might help them in the particulars) is fucking stupid.
And that is what the Tamas/garbon argument seems to be suggesting.
The issue here is not the problem of poor people not having enough supply of basic services such that they cannot afford them. The issue under discussion is that poor people have less then half the share of the actual wealth in this country that they had 20 years ago. And all that wealth that they lost, went into the hands of the very wealthy.
No matter how much the median rent of a two bedroom apartment in ghettoville is running, this is a problem.
Quote from: Berkut on December 09, 2016, 10:20:34 AM
And that is what the Tamas/garbon argument seems to be suggesting.
Which it isn't.
Quote from: garbon on December 09, 2016, 10:21:10 AM
Quote from: Berkut on December 09, 2016, 10:20:34 AM
And that is what the Tamas/garbon argument seems to be suggesting.
Which it isn't.
OK, but it sure as hell looks that way to me.
Otherwise, how is noting that raising minimum wage as a response to the observation that one way of increasing the wealth of the poor would to, you know, PAY THEM MORE, might increase the cost of housing responsive to the entire point of the discussion?
What IS the point of that observation, if it is NOT an argument against giving the poor a few more scraps? What is the point of the response?
I am genuinely at a loss here, and in the unenviable position of defending an economic position put forth by the local commie. Help me out.
Quote from: Berkut on December 09, 2016, 10:31:37 AM
I am genuinely at a loss here, and in the unenviable position of defending an economic position put forth by the local commie. Help me out.
:lol:
So garbon and Tamas, do you have any other suggestions for how to raise the share of income of the bottom 50% in the US to bring it more in line with, say, France (the other country mentioned in the article) if you think raising the minimum wage is not going to work?
Because self-evidently from the data it is possible for income inequality to be less than it is in the US. If you reject increases in the minimum wage, what do you think will work?
Quote from: LaCroix on December 09, 2016, 07:58:03 AM
Quote from: Jacob on December 09, 2016, 12:15:51 AM
Quote from: LaCroix on December 08, 2016, 09:30:56 PM
I wonder how the graphs would look if the groups that seem to wallow their whole lives in poverty stricken cesspools were omitted (white trash, etc.)
Why would you omit them?
to see how the average incomes look after you remove maybe 20% of the bottom 50%. certain groups seem like they're going to remain in abject poverty and have no interest rising above it or moving. at least the ghettos are a few blocks from wealth.
So you start with "for a bunch of them it's their own fault, so it's not a problem we should bother with" and wonder if we ignore them - which is reasonable because they only have themselves to blame - then we might find it's not so bad?
Quote from: Jacob on December 09, 2016, 11:48:25 AM
Quote from: LaCroix on December 09, 2016, 07:58:03 AM
to see how the average incomes look after you remove maybe 20% of the bottom 50%. certain groups seem like they're going to remain in abject poverty and have no interest rising above it or moving. at least the ghettos are a few blocks from wealth.
So you start with "for a bunch of them it's their own fault, so it's not a problem we should bother with" and wonder if we ignore them - which is reasonable because they only have themselves to blame - then we might find it's not so bad?
Not only do the poor not make enough money, they're not even interested in rising above it or *gasp* moving.
Stupid poors, choosing poverty.
An across-the-board minimum wage increase will not help anyone. On the short term it helps maybe those on minimum wage at the time, but nobody else. Then things would just start costing more and they would be back where they started, except small business would have a harder time to (legally) afford unskilled labour.
I know its not a valid example because it's just a bunch of unwashed untermensch, but in Hungary the minimum wage has been on a steady rise, with the occasional huge bumps up, since the mid 90s, and nowadays poverty is not declining, it's on the rise, due to a myriad of failed/malicious economic policies, yes, but the point is minimum wage did fuckall to counter that.
I think one of the problems here is that those who support minimum wage raises only see it from the end point of the people earning it. Which is noble, but that money is actually being paid by someone. And yes, big corporations would have no trouble paying a bit more. Except in those cases when you push it high enoug so they can just move operations to China/Mexico/Romania.
But the economy is not solely built of evil megacorporations hoarding vast amounts of wealths they do nothing with. The higher you raise the minimum wage, the more entry level jobs with small businesses you prevent/shut down, because the business owner would not be able to see as much value from the employee's work as he/she would cost.
My problem is that those who support minimum wage raises often sound like its some kind of magic wand that's once waved, economic troubles and poverty go away. This is a damaging and counterproductive stance.
Quote from: Tamas on December 09, 2016, 12:08:57 PM
An across-the-board minimum wage increase will not help anyone. On the short term it helps maybe those on minimum wage at the time, but nobody else. Then things would just start costing more and they would be back where they started, except small business would have a harder time to (legally) afford unskilled labour.
There is so much wrong with this I haven't even bothered to read the rest of your statement. It is self contradictory in the first two sentences.
It won't help anyone. - Sentence 1.
It will help in the short term - Sentence 2.
There are good arguments for and against minimum wage, what it ought to be set at, how that is determined, etc., etc. But they cannot start with such obvious...dogma.
Quote from: Tamas on December 09, 2016, 12:08:57 PM
My problem is that those who support minimum wage raises often sound like its some kind of magic wand that's once waved, economic troubles and poverty go away.
Can you find someone - anyone - who makes such a patently stupid claim?
QuoteThis is a damaging and counterproductive stance.
What is counter productive is arguing against positions that are self evidently idiotic and then hoping nobody notices.
Quote from: Berkut on December 09, 2016, 12:16:17 PM
Quote from: Tamas on December 09, 2016, 12:08:57 PM
An across-the-board minimum wage increase will not help anyone. On the short term it helps maybe those on minimum wage at the time, but nobody else. Then things would just start costing more and they would be back where they started, except small business would have a harder time to (legally) afford unskilled labour.
There is so much wrong with this I haven't even bothered to read the rest of your statement. It is self contradictory in the first two sentences.
It won't help anyone. - Sentence 1.
It will help in the short term - Sentence 2.
There are good arguments for and against minimum wage, what it ought to be set at, how that is determined, etc., etc. But they cannot start with such obvious...dogma.
Ok then!
Quote from: Tamas on December 09, 2016, 12:08:57 PM
An across-the-board minimum wage increase will not help anyone. On the short term it helps maybe those on minimum wage at the time, but nobody else. Then things would just start costing more and they would be back where they started, except small business would have a harder time to (legally) afford unskilled labour.
Well it might be nice if government benefits went to unemployed people and we didn't have to spend our tax dollars to subsidize gainfully employed people. That might be beneficial.
I mean we are talking about peanuts here. Would such a tiny increase in really low wages really have such enormous economic impact? I mean what products actually have their prices so directly tied to the minimum wage?
I guess it also depends on how much proportion of the workforce is on minimum wage, and how much you are raising it.
However, the inflation aspect aside, the problem is, you can't raise the value of one's work by law. You can raise the minimum amount one must pay to get the benefit of someone's labour, and you may very well do that to such a limited degree that no significant amount of minimum-earners will lose their job, but you are with every increase, increase the barrier that's in front of unemployed people who can't enter the economy on account of them not being able to produce the value of their would-be salary.
And as subset of that, you just make it that much harder to enter the working world, period. You end up having to allow apprenticeships contracts and the like, and then get what you have in the UK, all the problems with that.
Quote from: Valmy on December 09, 2016, 12:32:29 PM
I mean we are talking about peanuts here. Would such a tiny increase in really low wages really have such enormous economic impact? I mean what products actually have their prices so directly tied to the minimum wage?
See, that's the Big Lie in this day and age; labor is tied to something like 3-5% of total costs in manufacturing, but an unsustainable and out-of-control corporate governance/shareholder model needs to soak as much of it away as possible; it's market exposure and market share that drives profitability, not labor. But it's a convenient excuse.
Quote from: Tamas on December 09, 2016, 12:42:56 PM
However, the inflation aspect aside, the problem is, you can't raise the value of one's work by law.
But we are already doing that. People would not be taking these jobs without the government subsidizing them, because they would be sub-subsistence wages.
QuoteYou can raise the minimum amount one must pay to get the benefit of someone's labour, and you may very well do that to such a limited degree that no significant amount of minimum-earners will lose their job, but you are with every increase, increase the barrier that's in front of unemployed people who can't enter the economy on account of them not being able to produce the value of their would-be salary.
The minimum wage is lower than what it was in 1950, adjusted for inflation, so don't worry about all these supposed 'increases' going on :P
Labor is just as efficient now as it was in 1950 right? There has been no increase in the ability to produce more value in an hour of labor since technology has no impact on that correct?
Quote from: Tamas on December 09, 2016, 12:42:56 PM
I guess it also depends on how much proportion of the workforce is on minimum wage, and how much you are raising it.
However, the inflation aspect aside, the problem is, you can't raise the value of one's work by law. You can raise the minimum amount one must pay to get the benefit of someone's labour, and you may very well do that to such a limited degree that no significant amount of minimum-earners will lose their job, but you are with every increase, increase the barrier that's in front of unemployed people who can't enter the economy on account of them not being able to produce the value of their would-be salary.
And as subset of that, you just make it that much harder to enter the working world, period. You end up having to allow apprenticeships contracts and the like, and then get what you have in the UK, all the problems with that.
That is all very nice and in theory true to the extent that the world perfectly aligns with theory.
The reality, of course, is that theory and reality are related, but not tied so tightly that simple pronouncements from your 11th grade high school economics texts trumps actual observation of what is happening in the real world. And when that actual observation shows results that are badly mis-aligned from societal needs, a shrug and response of "Oh well, my high school econ book says the world should work this way!" doesn't really answer to the issue.
Quote from: Tamas on December 09, 2016, 12:08:57 PM
An across-the-board minimum wage increase will not help anyone. On the short term it helps maybe those on minimum wage at the time, but nobody else. Then things would just start costing more and they would be back where they started, except small business would have a harder time to (legally) afford unskilled labour.
I know its not a valid example because it's just a bunch of unwashed untermensch, but in Hungary the minimum wage has been on a steady rise, with the occasional huge bumps up, since the mid 90s, and nowadays poverty is not declining, it's on the rise, due to a myriad of failed/malicious economic policies, yes, but the point is minimum wage did fuckall to counter that.
I think one of the problems here is that those who support minimum wage raises only see it from the end point of the people earning it. Which is noble, but that money is actually being paid by someone. And yes, big corporations would have no trouble paying a bit more. Except in those cases when you push it high enoug so they can just move operations to China/Mexico/Romania.
But the economy is not solely built of evil megacorporations hoarding vast amounts of wealths they do nothing with. The higher you raise the minimum wage, the more entry level jobs with small businesses you prevent/shut down, because the business owner would not be able to see as much value from the employee's work as he/she would cost.
My problem is that those who support minimum wage raises often sound like its some kind of magic wand that's once waved, economic troubles and poverty go away. This is a damaging and counterproductive stance.
I'm very happy to agree that raising the minimum wage is not a magic wand that will make economic troubles and poverty go away.
My question to you is, what approaches do you think will help reverse the increase in economic inequality? If it's not minimum wage increases by themselves (as I said, I'm happy to agree that that is not a silver bullet) what approach will work? Is it something else entirely, or is it a range of policies including increasing the minimum wage in some cases?
Quote from: Jacob on December 09, 2016, 11:48:25 AM
Quote from: LaCroix on December 09, 2016, 07:58:03 AM
Quote from: Jacob on December 09, 2016, 12:15:51 AM
Quote from: LaCroix on December 08, 2016, 09:30:56 PM
I wonder how the graphs would look if the groups that seem to wallow their whole lives in poverty stricken cesspools were omitted (white trash, etc.)
Why would you omit them?
to see how the average incomes look after you remove maybe 20% of the bottom 50%. certain groups seem like they're going to remain in abject poverty and have no interest rising above it or moving. at least the ghettos are a few blocks from wealth.
So you start with "for a bunch of them it's their own fault, so it's not a problem we should bother with" and wonder if we ignore them - which is reasonable because they only have themselves to blame - then we might find it's not so bad?
kinda. it's more, how would we fix the poor income locations that once relied upon an industry that just is not coming back? I don't think it helps much to lump all low-income earners together to try to find a solution. I think it's more helpful to examine the groups within the bottom 50%. first, to see whether some of the 50% are fine (e.g., maybe the top of the bottom are doing mostly OK and the overall number is weighed down by the bottom of the bottom 50%). second, to see whether more realistic solutions can be found to assist some of the groups (e.g., it's probably easier to help inner city ghettos than rural decayed towns)
as it stands, I don't think it's very helpful to start with a huge, broad number like "bottom 50%," unless the purpose is sensationalism
Quote from: Jacob on December 09, 2016, 01:43:31 PM
I'm very happy to agree that raising the minimum wage is not a magic wand that will make economic troubles and poverty go away.
My question to you is, what approaches do you think will help reverse the increase in economic inequality? If it's not minimum wage increases by themselves (as I said, I'm happy to agree that that is not a silver bullet) what approach will work? Is it something else entirely, or is it a range of policies including increasing the minimum wage in some cases?
I know you didn't ask me...
I tend to be very anti-minimum wage because of all the possible distortions it can create. I'd be much more comfortable with something like a guaranteed minimum income (which no less a conservative economist than Milton Friedman was in support of) to look after income inequality, with (and I'm just spitballing the actual #s here) each dollar of employment income reducing your guaranteed income by $0.50 or so.
Quote from: LaCroix on December 09, 2016, 01:44:11 PM
kinda. it's more, how would we fix the poor income locations that once relied upon an industry that just is not coming back? I don't think it helps much to lump all low-income earners together to try to find a solution. I think it's more helpful to examine the groups within the bottom 50%. first, to see whether some of the 50% are fine (e.g., maybe the top of the bottom are doing mostly OK and the overall number is weighed down by the bottom of the bottom 50%). second, to see whether more realistic solutions can be found to assist some of the groups (e.g., it's probably easier to help inner city ghettos than rural decayed towns)
as it stands, I don't think it's very helpful to start with a huge, broad number like "bottom 50%," unless the purpose is sensationalism
From the article in question they're looking at broad economic indicators to compare between countries and to track trends across decades, and they're looking at the bottom 50%, the middle 40%, and the top 10%. Certainly, when looking at how to target specific policies to help individual groups you'll want to look at more detailed and local stats - but when looking at structural trends across decades and differences between countries that approach seems to me to be perfectly servicable.
From the article:
QuoteFrom 1980 to 2014, average national income per adult grew by 61 percent in the United States, yet the average pre-tax income of the bottom 50 percent of individual income earners stagnated at about $16,000 per adult after adjusting for inflation.
Are you suggesting that the incomes of the bottom 20% decreased so significantly from the average $16k/year in 1980 as to obscure the otherwise substantial gains of the 21st to 50th bottom percentiles by 2014? That seems to me fairly unlikely, as there's not that much room for downward movement from a starting point of $16K/year.
Quote from: LaCroix on December 09, 2016, 01:44:11 PM
as it stands, I don't think it's very helpful to start with a huge, broad number like "bottom 50%," unless the purpose is sensationalism
The reason for picking a number like that is so that you can compare what's happening over time. It's certainly more useful to see what "the bottom 50%" is doing than what "James Smith" is up to, or even "members of the Steelworkers Union".
Quote from: Barrister on December 09, 2016, 01:52:23 PM
Quote from: Jacob on December 09, 2016, 01:43:31 PM
I'm very happy to agree that raising the minimum wage is not a magic wand that will make economic troubles and poverty go away.
My question to you is, what approaches do you think will help reverse the increase in economic inequality? If it's not minimum wage increases by themselves (as I said, I'm happy to agree that that is not a silver bullet) what approach will work? Is it something else entirely, or is it a range of policies including increasing the minimum wage in some cases?
I know you didn't ask me...
I tend to be very anti-minimum wage because of all the possible distortions it can create. I'd be much more comfortable with something like a guaranteed minimum income (which no less a conservative economist than Milton Friedman was in support of) to look after income inequality, with (and I'm just spitballing the actual #s here) each dollar of employment income reducing your guaranteed income by $0.50 or so.
I have no particular objections to that :hug:
I mean, I'm certainly willing to listen to arguments why it may be a bad idea, but on the face of it it sounds eminently reasonable to me.
Ontario and PEI are experimenting with this presently, IIRC.
Quote from: Barrister on December 09, 2016, 01:52:23 PM
Quote from: Jacob on December 09, 2016, 01:43:31 PM
I'm very happy to agree that raising the minimum wage is not a magic wand that will make economic troubles and poverty go away.
My question to you is, what approaches do you think will help reverse the increase in economic inequality? If it's not minimum wage increases by themselves (as I said, I'm happy to agree that that is not a silver bullet) what approach will work? Is it something else entirely, or is it a range of policies including increasing the minimum wage in some cases?
I know you didn't ask me...
I tend to be very anti-minimum wage because of all the possible distortions it can create. I'd be much more comfortable with something like a guaranteed minimum income (which no less a conservative economist than Milton Friedman was in support of) to look after income inequality, with (and I'm just spitballing the actual #s here) each dollar of employment income reducing your guaranteed income by $0.50 or so.
I am ok with minimum wage as long as it is tied to actual economic indicators based on some objectively sustainable standard.
IE, some percentage of the CPI, or something like that, as opposed to some emotive measure like "ZOMG THIS MOM SHOULD BE ABLE TO SUPPORT HER CHILDREN!!!!"
Quote from: Jacob on December 09, 2016, 01:56:37 PM
Quote from: Barrister on December 09, 2016, 01:52:23 PM
Quote from: Jacob on December 09, 2016, 01:43:31 PM
I'm very happy to agree that raising the minimum wage is not a magic wand that will make economic troubles and poverty go away.
My question to you is, what approaches do you think will help reverse the increase in economic inequality? If it's not minimum wage increases by themselves (as I said, I'm happy to agree that that is not a silver bullet) what approach will work? Is it something else entirely, or is it a range of policies including increasing the minimum wage in some cases?
I know you didn't ask me...
I tend to be very anti-minimum wage because of all the possible distortions it can create. I'd be much more comfortable with something like a guaranteed minimum income (which no less a conservative economist than Milton Friedman was in support of) to look after income inequality, with (and I'm just spitballing the actual #s here) each dollar of employment income reducing your guaranteed income by $0.50 or so.
I have no particular objections to that :hug:
I mean, I'm certainly willing to listen to arguments why it may be a bad idea, but on the face of it it sounds eminently reasonable to me.
Ontario and PEI are experimenting with this presently, IIRC.
Yeah, I want to see the results of more serious experimentation.
It's going to have its drawbacks I'm sure. There will be a small minority of people who are satisfied to subsist on a guaranteed minimum wage who might otherwise be working - but I suspect it's pretty small, and likely smaller than the costs of enforcing various requirements onto welfare programs.
Currently, the biggest driver of income growth is asset appreciation. The p/e ratio of the S&P 500 is over 25 right now. The kind of profit growth a number like that implies is just not reasonable to expect. The top 50% are the people who own that stuff, and also property, which has ballooned back out of control. I wonder what the gap would be if all of these things actually had fair valuations.
Quote from: Barrister on December 09, 2016, 02:35:18 PM
Yeah, I want to see the results of more serious experimentation.
It's going to have its drawbacks I'm sure. There will be a small minority of people who are satisfied to subsist on a guaranteed minimum wage who might otherwise be working - but I suspect it's pretty small, and likely smaller than the costs of enforcing various requirements onto welfare programs.
I think a key concept that is going to take a serious cultural shift in thinking is getting away from the idea that "otherwise be working" has some kind of innate value. What we are talking about is the *fact* that the value of a huge portion of what we historically have considered "human" work is basically approaching zero, or close to it. In some cases, it is likely negative.
So why does there even need to be punitive requirements on welfare? In fact, the very term "welfare" needs to go.
Nor do I even agree with the idea that the amount of guranateed minimum income should be reduced by your own income. That pretty much says it is something else entirely - welfare.
Now, I think given some reasonable progressive tax rates, you would end up with effectively the same thing, but I think a key to the success of any kind of such program is to get away from the concept that this is welfare, or something like that.
The better way to think of it is that this is the share that all human participants in our society get from the production of that society that is based on the infrastructure and institutions, rather than labor and capital. IE, for some shipping company, their productive capacity is based on three things:
1. The capital investment. This should return profits to the investors/owners.
2. The necessary labor done. This should be returned to those doing the labor in the form of wages.
3. The existence and maintenance of infrastructure and a coherent, law abiding, and consuming society. This share, previously ignored for the most part, is returned to society as a group in the form of taxes and a guaranteed income.
We live in a world where #3 is basically ignored (not entirely, in that it would currently be realized through taxes, presumably), and the need for #2 is declining consistently, which is resulting in the productive capacity of business going almost entirely to #1. Hence the ultra rich getting ultra richer.
If we stop calling #3 welfare, and instead just consider it what a productive business owes to the society which is a absolute necessity for it's success, then there is no particular stigma attached to it. Everyone gets their share, and if you choose to work harder to earn over and above that, bully for you.
You guys don't have to come up with newfangled schemes, really. We didn't have a guaranteed income thingie back in the 60s. But you could buy a house for a years' wages then.
The property market crashing would put a big dent in inequality if you think about it.
Then there's this of course:
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fi2.cdn.turner.com%2Fmoney%2F2011%2F06%2F13%2Fnews%2Feconomy%2Fcollege_tuition_middle_class%2Fchart-wage-tuition3.top.jpg&hash=3ce58cb0a857a1e31cbc63dd54ff266755406506)
Quote from: MadImmortalMan on December 09, 2016, 02:53:54 PM
Currently, the biggest driver of income growth is asset appreciation. The p/e ratio of the S&P 500 is over 25 right now. The kind of profit growth a number like that implies is just not reasonable to expect. The top 50% are the people who own that stuff, and also property, which has ballooned back out of control. I wonder what the gap would be if all of these things actually had fair valuations.
The p/e ratio of the S&P 500 doesn't necessarily imply a ton of profit growth. It could alternatively reflect expectations of a a future with a low risk free rate of return and equity risk premium.
Quote from: Tamas on December 09, 2016, 12:42:56 PM
I guess it also depends on how much proportion of the workforce is on minimum wage, and how much you are raising it.
However, the inflation aspect aside, the problem is, you can't raise the value of one's work by law. You can raise the minimum amount one must pay to get the benefit of someone's labour, and you may very well do that to such a limited degree that no significant amount of minimum-earners will lose their job, but you are with every increase, increase the barrier that's in front of unemployed people who can't enter the economy on account of them not being able to produce the value of their would-be salary.
And as subset of that, you just make it that much harder to enter the working world, period. You end up having to allow apprenticeships contracts and the like, and then get what you have in the UK, all the problems with that.
You are assuming that all employees are paid an amount equal to the value of their labour. The reason minimum wage laws exist is because historically that is not true. If all employees were paid according to the value of their labour you would not see the result Picketty has found. That is the very reason he suggests strengthening the employee's ability to bargain for better wages and increasing minimum wages.
Quote from: MadImmortalMan on December 09, 2016, 04:13:31 PM
You guys don't have to come up with newfangled schemes, really. We didn't have a guaranteed income thingie back in the 60s. But you could buy a house for a years' wages then.
The property market crashing would put a big dent in inequality if you think about it.
Then there's this of course:
(https://languish.org/forums/proxy.php?request=http%3A%2F%2Fi2.cdn.turner.com%2Fmoney%2F2011%2F06%2F13%2Fnews%2Feconomy%2Fcollege_tuition_middle_class%2Fchart-wage-tuition3.top.jpg&hash=3ce58cb0a857a1e31cbc63dd54ff266755406506)
If it was as simple as returning to those good old days of high taxes on high income earners, stronger regulation of the banking/investment industry; reasonable executive pay and, you are correct, much less expensive educational opportunities then I would agree with you that things like guaranteed income may not be necessary. But I don't see those other things coming back any time soon.
Quote from: Jacob on December 09, 2016, 01:54:28 PMFrom the article in question they're looking at broad economic indicators to compare between countries and to track trends across decades, and they're looking at the bottom 50%, the middle 40%, and the top 10%. Certainly, when looking at how to target specific policies to help individual groups you'll want to look at more detailed and local stats - but when looking at structural trends across decades and differences between countries that approach seems to me to be perfectly servicable.
From the article:
QuoteFrom 1980 to 2014, average national income per adult grew by 61 percent in the United States, yet the average pre-tax income of the bottom 50 percent of individual income earners stagnated at about $16,000 per adult after adjusting for inflation.
Are you suggesting that the incomes of the bottom 20% decreased so significantly from the average $16k/year in 1980 as to obscure the otherwise substantial gains of the 21st to 50th bottom percentiles by 2014? That seems to me fairly unlikely, as there's not that much room for downward movement from a starting point of $16K/year.
re: comparisons with other countries, I'm not sure they've done a good enough job with this yet because it doesn't seem like the comparison takes into account the difference in post-tax incomes. the plinkett (sp?) study assumes post-tax "probably" wouldn't affect things much, but I'm not convinced
I was more suggesting bottom 10% and top 10% of the bottom 50%. I don't know. though I think you'd have a more accurate study if it was broken down further.
Piketty's new book Capital and Ideology:
QuoteNow's the time to spread the wealth, says Thomas Piketty
His premise is that inequality is a choice societies make, not an inevitability
Simon Kuper
Thomas Piketty's new book, Capital and Ideology, appears in English translation next March. But I got a sneak preview by walking into my local Parisian bookshop and handing over €25 for the French edition. My conclusion: the 1,200-page tome might become even more politically influential than the French economist's 2013 overview of inequality, Capital in the Twenty-First Century.
Helped a little by that book, inequality has soared up the left's agenda, especially in the particularly unequal US and UK. Now Elizabeth Warren has a shot at becoming the most redistributionist US president since Franklin D Roosevelt, while an electable post-Corbyn Labour leader could achieve similar in Britain.
Piketty explains why this could be the moment for a turn to equality, and which policies could make that happen.
His premise is that inequality is a political choice. It's something societies opt for, not an inevitable result of technology and globalisation. Whereas Marx saw history as class struggle, Piketty sees it as a battle of ideologies.
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 his overambitious history of inequality from ancient India to today's US, Piketty recounts the justifications that recur throughout time: "Rich people deserve their wealth." "It will trickle down." "They give it back through philanthropy." "Property is liberty." "The poor are undeserving." "Once you start redistributing wealth, you won't know where to stop and there'll be chaos" — a favourite argument after the French Revolution. "Communism failed." "The money will go to black people" — an argument that, Piketty says, explains why inequality remains highest in countries with historic racial divides such as Brazil, South Africa and the US.
Another common justification, which he doesn't mention, is "High taxes are punitive" — as if the main issue were the supposed psychology behind redistribution rather than its actual effects.
All these justifications add up to what he calls the "sacralisation of property". But today, he writes, the "propriétariste and meritocratic narrative" is getting fragile. There's a growing understanding that so-called meritocracy has been captured by the rich, who get their kids into the top universities, buy political parties and hide their money from taxation.
Moreover, notes Piketty, the wealthy are overwhelmingly male and their lifestyles tend to be particularly environmentally damaging. Donald Trump — a climate-change-denying sexist heir who got elected president without releasing his tax returns — embodies the problem.
In fact, support for redistribution is growing even faster than Piketty acknowledges, especially in the US. Twice as many Americans now feel more distrust than admiration for billionaires, according to a HuffPost/YouGov poll. Millennials are especially suspicious of success.
More American adults under 30 say they believe in "socialism" than "capitalism", report the pollsters Gallup. This generation owns too little property to sacralise it.
Centre-right parties across the west have taken up populism because their low-tax, small-state story wasn't selling any more. Rightwing populism speaks to today's anti-elitist, anti-meritocratic mood.
However, it deliberately refocuses debate from property to what Piketty calls "the frontier" (and others would call borders). That leaves a gap in the political market for redistributionist ideas. We're now at a juncture much like around 1900, when extreme inequality helped launch social democratic and communist parties.
Piketty lays out a new redistributionist agenda. He calls for "educational justice" — essentially, spending the same amount on each person's education. He favours giving workers a major say over how their companies are run, as in Germany and Sweden. But his main proposal is for wealth taxes.
Far from abolishing property, he wants to spread it to the bottom half of the population, who even in rich countries have never owned much. To do this, he says, requires redefining private property as "temporary" and limited: you can enjoy it during your lifetime, in moderate quantities.
He proposes wealth taxes of 90 per cent on billionaires. From the proceeds, a country such as France could give each citizen a trust fund worth about €120,000 at age 25. Very high tax rates, he notes, didn't impede fast growth in the 1950-80 period.
Warren (advised by economists who work with Piketty) is proposing annual taxes of 2 per cent on household fortunes over $50m, and 3 per cent on billionaires. She projects that this would affect 75,000 households, and yield revenues of $2.75tn over 10 years. Polls suggest most Americans like the idea.
Paradoxically, the plutocratic US may be ideal terrain for a wealth tax. Mark Stabile, economist at Insead, points out that, first, rich Americans now have so much wealth that even if Warren captures just a small proportion, it could add up to a lot; second, Americans are taxed on their passports, so moving wealth abroad won't save them (and Warren would slap hefty exit taxes on anyone giving up citizenship); last, thanks to SwissLeaks and the Panama Papers, we've learnt a lot about how the rich hide money.
Advocates of inequality will come up with the usual justifications. But now is the redistributionists' best chance.
'Capital et idéologie' is published in France by Seuil
By inescapable extension, every unequal society creates an ideology to legitimize the seizure and transfer of wealth too.
No surprise a Frenchman tries to base an argument on deconstructionism.
Quote from: Admiral Yi on September 26, 2019, 05:57:34 PM
No surprise a Frenchman tries to base an argument on deconstructionism.
How is that deconstructionism?
Quote from: Oexmelin on September 26, 2019, 06:17:33 PM
How is that deconstructionism?
All wriiting is the result of the biases of the writer.
That is not deconstructionism.
OK
Quote from: Admiral Yi on September 26, 2019, 06:25:17 PM
Quote from: Oexmelin on September 26, 2019, 06:17:33 PM
How is that deconstructionism?
All wriiting is the result of the biases of the writer.
Been a while, but from an English/literary theory perspective that's not deconstructionism at all. Not least because it sort of follows post-structuralism which famously declared the author is dead, so unless you mean the writer as the reader then they don't care at all about the writer :mellow:
But deconstructionism in literary theory is about language being inherently unstable and open, so a text can't have "meaning". The text may have a "meaning" but because it must use language, it is always undermining or contradicting that "meaning" at exactly the same time. All writing is open to numerous often contradictory interpretations, which leads to what Derrida called a "blind spot" in the text. But these aren't outside of the text, they're inherent in it.
It may have a different meaning in politics or history. But in literary terms it's uninterested in the writer, or in politics. It's used by feminist, queer theorists, cultural materialists but they always kind of scorned it a bit as awkwardly apolitical.
Quote from: Sheilbh on September 26, 2019, 06:47:08 PMIt may have a different meaning in politics or history.
It doesn't. It's the same in history (which tends to pillage its theories elsewhere anyways) or political science.
What Yi seemed to be denouncing - the idea that a writer's biases, preferences, and context influences their writing - is quite commonplace. It's at the heart of critical self-examination, law, history, philosophy, etc. - and it's not especially French.
I am not equipped with either the information or inclination to dispute, so I cede the field. Consider the point withdrawn.
Quote from: Admiral Yi on September 26, 2019, 07:01:28 PM
I am not equipped with either the information or inclination to dispute, so I cede the field. Consider the point withdrawn.
You could have just had the gracious response that you used the wrong term and try to explain what it is you meant.
Also thinking your point through isn't that the old, sort-of Gramscian Marxist answer?
An unequal society doesn't create the ideology to legitimise seizing and transferring wealth, because that is in the material interests of the majority in that society. While ideology is the sort of cultural and social world which buttresses the people who don't have wealth in support of the institutions which protect the wealth of those who have it.
Again it's been a long time since I did anything on this sort of stuff. But I'm not seeing where he's differing from Marx :huh:
Quote from: Sheilbh on September 26, 2019, 07:10:50 PM
Also thinking your point through isn't that the old, sort-of Gramscian Marxist answer?
An unequal society doesn't create the ideology to legitimise seizing and transferring wealth, because that is in the material interests of the majority in that society. While ideology is the sort of cultural and social world which buttresses the people who don't have wealth in support of the institutions which protect the wealth of those who have it.
Again it's been a long time since I did anything on this sort of stuff. But I'm not seeing where he's differing from Marx :huh:
It could simply be that he wanted to make a dismissive comment.
Quote from: Sheilbh on September 26, 2019, 07:10:50 PM
Also thinking your point through isn't that the old, sort-of Gramscian Marxist answer?
An unequal society doesn't create the ideology to legitimise seizing and transferring wealth, because that is in the material interests of the majority in that society. While ideology is the sort of cultural and social world which buttresses the people who don't have wealth in support of the institutions which protect the wealth of those who have it.
Again it's been a long time since I did anything on this sort of stuff. But I'm not seeing where he's differing from Marx :huh:
How do come to the conclusion that minorities need ideologies, but majorities don't? Marxism was certainly an ideology "of the majority."
Quote from: Admiral Yi on September 26, 2019, 07:46:32 PM
How do come to the conclusion that minorities need ideologies, but majorities don't? Marxism was certainly an ideology "of the majority."
How was Marxism an ideology of the majority?
Quote from: Oexmelin on September 26, 2019, 08:36:03 PM
How was Marxism an ideology of the majority?
"Workers" being greater in number than "owners of capital."
Ah, ok.
But this is not what Sheilbh is saying, though. It's "majority ideology" vs "minority ideology" - it doesn't really relate to how many people it concerns itself with. In other words, the ideology of those who have power is peddled as a hegemonic "common sense", and opposing ideologies are therefore put in a defensive position of needing to be continuously be asserted, and justified against what is so evidently "natural". Jameson (a Marxist) put it best when he wrote that it was actually easier to imagine the end of the world than the end of capitalism.
And he's right that this is more or less Gramsci's point that Piketty is weirdly casting in opposition to Marx.
Gotta run for karaoke night. I'll try to gnaw on that when I come back.
Quote from: Admiral Yi on September 26, 2019, 08:38:22 PM
Quote from: Oexmelin on September 26, 2019, 08:36:03 PM
How was Marxism an ideology of the majority?
"Workers" being greater in number than "owners of capital."
Where you go wrong is attempting to understand dialectical materialism in liberal democratic terms of popular support.
A suggestion for your karaoke night:
L'État comprime et la Loi triche,
L'impôt saigne le malheureux ;
Nul devoir ne s'impose au riche ;
Le droit du pauvre est un mot creux
C'est assez languir en tutelle,
L'Égalité veut d'autres lois ;
"Pas de droits sans devoirs, dit-elle
Égaux pas de devoirs sans droits."
C'est la lutte finale ;
Groupons nous et demain
L'Internationale
Sera le genre humain.
Give me a link to a melody.
Every year before I head to Montreal I say I'm going to get Ca Plane Pour Moi down and fucking blow their binds and I never do.
Quote from: Oexmelin on September 26, 2019, 09:15:42 PM
Ah, ok.
But this is not what Sheilbh is saying, though. It's "majority ideology" vs "minority ideology" - it doesn't really relate to how many people it concerns itself with. In other words, the ideology of those who have power is peddled as a hegemonic "common sense", and opposing ideologies are therefore put in a defensive position of needing to be continuously be asserted, and justified against what is so evidently "natural". Jameson (a Marxist) put it best when he wrote that it was actually easier to imagine the end of the world than the end of capitalism.
And he's right that this is more or less Gramsci's point that Piketty is weirdly casting in opposition to Marx.
OK. Here's what I see. It's just a rephrasing of the premise: that people "in power" have a need to legitimize themselves, but those out do not.
So I rephrase the question I asked Shelf: how does this premise obtain?
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". ;)
How do you compare different ideological choices against each other and determine which is preferable?
Quote from: The Brain on September 27, 2019, 08:33:57 AM
How do you compare different ideological choices against each other and determine which is preferable?
Do a save before the choice and then reload and try another choice. Use the best save outcome as the basis for further play.
Quote from: grumbler on September 27, 2019, 08:39:26 AM
Quote from: The Brain on September 27, 2019, 08:33:57 AM
How do you compare different ideological choices against each other and determine which is preferable?
Do a save before the choice and then reload and try another choice. Use the best save outcome as the basis for further play.
How do you determine which outcome is best?
Quote from: Malthus on September 27, 2019, 08:08:08 AM
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.
A society that won't let you provide for your children sounds horrible.
Quote from: The Brain on September 27, 2019, 08:40:52 AM
Quote from: grumbler on September 27, 2019, 08:39:26 AM
Quote from: The Brain on September 27, 2019, 08:33:57 AM
How do you compare different ideological choices against each other and determine which is preferable?
Do a save before the choice and then reload and try another choice. Use the best save outcome as the basis for further play.
How do you determine which outcome is best?
Rawls had one answer to that question
Dworkin another
I am sure there are others too
Quote from: The Brain on September 27, 2019, 08:40:52 AM
Quote from: grumbler on September 27, 2019, 08:39:26 AM
Quote from: The Brain on September 27, 2019, 08:33:57 AM
How do you compare different ideological choices against each other and determine which is preferable?
Do a save before the choice and then reload and try another choice. Use the best save outcome as the basis for further play.
How do you determine which outcome is best?
Probably the one that results in the highest score.
Quote from: crazy canuck on September 27, 2019, 08:57:26 AM
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?
Quote from: Valmy on September 27, 2019, 09:11:11 AM
Quote from: crazy canuck on September 27, 2019, 08:57:26 AM
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.
Quote from: crazy canuck on September 27, 2019, 08:57:26 AM
Quote from: Malthus on September 27, 2019, 08:08:08 AM
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:
QuoteEvery 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.
Quote from: Malthus on September 27, 2019, 09:38:01 AM
Quote from: crazy canuck on September 27, 2019, 08:57:26 AM
Quote from: Malthus on September 27, 2019, 08:08:08 AM
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:
QuoteEvery 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.
Quote from: The Brain on September 27, 2019, 09:02:28 AM
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.
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.
Quote from: crazy canuck on September 27, 2019, 09:46:45 AM
Quote from: Malthus on September 27, 2019, 09:38:01 AM
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:
QuoteEvery 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.
Quote from: Valmy on September 27, 2019, 09:51:23 AM
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?
Quote from: crazy canuck on September 27, 2019, 09:46:45 AM
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 ...
Quote from: grumbler on September 27, 2019, 09:54:20 AM
Quote from: crazy canuck on September 27, 2019, 09:46:45 AM
Quote from: Malthus on September 27, 2019, 09:38:01 AM
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:
QuoteEvery 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.
Quote from: Malthus on September 27, 2019, 09:57:46 AM
Quote from: crazy canuck on September 27, 2019, 09:46:45 AM
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.
Quote from: crazy canuck on September 27, 2019, 09:57:58 AM
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.
Quote from: crazy canuck on September 27, 2019, 10:00:03 AM
Quote from: Malthus on September 27, 2019, 09:57:46 AM
Quote from: crazy canuck on September 27, 2019, 09:46:45 AM
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'?
Quote from: Malthus on September 27, 2019, 09:57:46 AM
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.
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.
Quote from: Malthus on September 27, 2019, 10:09:22 AM
Quote from: crazy canuck on September 27, 2019, 10:00:03 AM
Quote from: Malthus on September 27, 2019, 09:57:46 AM
Quote from: crazy canuck on September 27, 2019, 09:46:45 AM
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'?
I think your reasoning ignores that a system which allows extreme wealth inequality can no longer claim to be meritocratic. The ethical argument for a meritocracy is it is fair. But that does not necessarily mean those who are less successful should not receive assistance. As Grumbler pointed out non meritorious systems already deny that aid on the spurious basis it is underserved.
Quote from: grumbler on September 27, 2019, 09:49:47 AM
Quote from: The Brain on September 27, 2019, 09:02:28 AM
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.
Many people are of a different generation from their children.
Quote from: crazy canuck on September 27, 2019, 09:56:19 AM
Quote from: Valmy on September 27, 2019, 09:51:23 AM
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?
No just that ideas used to address poverty are different than ones that address inequality of wealth. I mean we have tried just taking all the rich people's stuff before and while that was effective at addressing inequality it typically has not done much for poverty.
Quote from: Valmy on September 27, 2019, 11:41:59 AM
Quote from: crazy canuck on September 27, 2019, 09:56:19 AM
Quote from: Valmy on September 27, 2019, 09:51:23 AM
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?
No just that ideas used to address poverty are different than ones that address inequality of wealth. I mean we have tried just taking all the rich people's stuff before and while that was effective at addressing inequality it typically has not done much for poverty.
At least to the Swedish left poverty is fine compared to inequality. They will rather have no kid get medical treatment than one kid get it and not the rest.
Quote from: Valmy on September 27, 2019, 11:41:59 AM
Quote from: crazy canuck on September 27, 2019, 09:56:19 AM
Quote from: Valmy on September 27, 2019, 09:51:23 AM
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?
No just that ideas used to address poverty are different than ones that address inequality of wealth. I mean we have tried just taking all the rich people's stuff before and while that was effective at addressing inequality it typically has not done much for poverty.
Yes, we have tried high taxation rates before and the result was high economic growth and low income inequality. I am not sure what example you are thinking about.
Quote from: The Brain on September 27, 2019, 11:40:30 AM
Quote from: grumbler on September 27, 2019, 09:49:47 AM
Quote from: The Brain on September 27, 2019, 09:02:28 AM
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.
Many people are of a different generation from their children.
Oooh! It's a non-sequitur contest! Great! Your's is a pretty good starting gambit.
I'll reply "What is the airspeed of an an unladen swallow?"
Quote from: crazy canuck on September 27, 2019, 11:48:57 AM
Yes, we have tried high taxation rates before and the result was high economic growth and low income inequality. I am not sure what example you are thinking about.
There have been far more confiscatory strategies tried than simply high taxes :P
But sure. Let's have high taxes. So the new system is just the old system with different taxes. It has the benefit of being straightforward to implement.
Quote from: grumbler on September 27, 2019, 11:54:06 AM
Quote from: The Brain on September 27, 2019, 11:40:30 AM
Quote from: grumbler on September 27, 2019, 09:49:47 AM
Quote from: The Brain on September 27, 2019, 09:02:28 AM
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.
Many people are of a different generation from their children.
Oooh! It's a non-sequitur contest! Great! Your's is a pretty good starting gambit.
I'll reply "What is the airspeed of an an unladen swallow?"
You seem confused.
Quote from: Valmy on September 27, 2019, 11:41:59 AM
No just that ideas used to address poverty are different than ones that address inequality of wealth. I mean we have tried just taking all the rich people's stuff before and while that was effective at addressing inequality it typically has not done much for poverty.
I don't believe at all that this is true. I would argue that the poor in the US are far better off than they were at, say, the end of WW2. Income inequality is worse, and wealth inequality far worse yet. There were fits and spurts of increased income equality, but I'm not sure the US has ever tackled wealth inequality.
Here's a stat I found interesting, though it's several years old now; the average American worker in a corporation of 500 people or more has to work more than a month to make what the average CEO of such a company makes in one hour.
Quote from: The Brain on September 27, 2019, 11:59:11 AM
Quote from: grumbler on September 27, 2019, 11:54:06 AM
Quote from: The Brain on September 27, 2019, 11:40:30 AM
Quote from: grumbler on September 27, 2019, 09:49:47 AM
Quote from: The Brain on September 27, 2019, 09:02:28 AM
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.
Many people are of a different generation from their children.
Oooh! It's a non-sequitur contest! Great! Your's is a pretty good starting gambit.
I'll reply "What is the airspeed of an an unladen swallow?"
You seem confused.
Good one! My response: "Spam is short for 'spiced ham.'"
Speaking of other systems of incentive, one big one is reputational.
For example - some hunter-gatherers have a strong ethic of equal sharing, those who collect food are expected to share everything with the group. Individuals who don't share as they should are looked down upon. Those who bring in more than they eat are praised. Those who attempt to "free ride" are scorned; in the worst case scenario - kicked out of the group.
Interestingly, one group that behaved in exactly this way was pot-smokers in high school, with pot. ;) They hardly ever smoked up alone - the idea was to share one's pot with the group of stoners. The idea was that then, they would be smoked up in turn when they had none. Those who always smoked other peoples' pot, but never contributed, saw their reputation suffer, eventually suffering scorn and expulsion.
Quote from: Valmy on September 27, 2019, 11:56:48 AM
Quote from: crazy canuck on September 27, 2019, 11:48:57 AM
Yes, we have tried high taxation rates before and the result was high economic growth and low income inequality. I am not sure what example you are thinking about.
There have been far more confiscatory strategies tried than simply high taxes :P
But sure. Let's have high taxes. So the new system is just the old system with different taxes. It has the benefit of being straightforward to implement.
Yes there have other methods. But that is not what "we" have tried so I was not sure what you were referencing. What was it you were thinking about?
Quote from: Admiral Yi on September 27, 2019, 01:16:52 AM
OK. Here's what I see. It's just a rephrasing of the premise: that people "in power" have a need to legitimize themselves, but those out do not.
So I rephrase the question I asked Shelf: how does this premise obtain?
But in Marxist terms it's not a need. What matters is the economic material forces in a society: they produce the cultural and social apparatus, which forms the ideology of the ruling class. The ruling class economically produces the ruling ideology. And I don't know but I think with Marx it's a fairly basic concept and to change it you need to change the underlying material forces because ideology is just a product of economic relations. So the move from Medieval Christianity to the Enlightenment just reflects the move from feudal to bourgeois economic relations.
Gramsci makes this a lot more sophisticated by basically talking about the ruling class produces and is subject to its own ideology and that the other classes in effect consent. So the state, civil society, intellectuals, the Church all produce the world of what is "natural". It's not as simple as in Marx and the ruling class believe this stuff just as much as everyone else. So part of the way to change this is to disrupt the cultural hegemony, which I think is what Fox heads mean when they're talking about cultural Marxism.
So I read the section about ideology in that review and to me, the examples given sounds very similar to Gramsci which is weird because Piketty is apparently in contrast to Marx and talking about a battle of ideologies and not a battle of classes. And I wonder if your point is right and what he's saying is basically about the primacy of politics, ideology isn't just a product of material forces but rather a political force which shapes material forces. Or that section could just be getting his argument wrong :mellow:
Quote from: Malthus on September 27, 2019, 10:09:22 AM
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'?
I'm not sure if it's his argument yet, because it's just a review. As I say I'm not sure on at least one point.
But your response is the Michael Young "Rise of the Meritocracy" which I think is true - and he coined the word meritocracy. Basically meritocracy wouldn't weaken classes but strengthen them, but they'd form on intellectual/meritocratic forms. Society would be unequal fairly, while the old system was unfairly unequal.
Quote from: Sheilbh on September 27, 2019, 01:41:40 PM
Quote from: Malthus on September 27, 2019, 10:09:22 AM
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'?
I'm not sure if it's his argument yet, because it's just a review. As I say I'm not sure on at least one point.
But your response is the Michael Young "Rise of the Meritocracy" which I think is true - and he coined the word meritocracy. Basically meritocracy wouldn't weaken classes but strengthen them, but they'd form on intellectual/meritocratic forms. Society would be unequal fairly, while the old system was unfairly unequal.
Yup, exactly.
Nothing wrong with an ideology of meritocracy. Alone, however, it can lead to bad results - if inequality leads to the "losers" suffering. What is needed is an ideology that suffering should not be tolerated, alongside the ideology of meritocracy. The "winners", however fair their "win" may be, must be under obligation to support the "losers", however 'undeserving'.
My favoured society would see a fair meritocracy tempered by an ethic of obligation.
Quote from: The Brain on September 27, 2019, 11:59:11 AM
Quote from: grumbler on September 27, 2019, 11:54:06 AM
Quote from: The Brain on September 27, 2019, 11:40:30 AM
Quote from: grumbler on September 27, 2019, 09:49:47 AM
Quote from: The Brain on September 27, 2019, 09:02:28 AM
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.
Many people are of a different generation from their children.
Oooh! It's a non-sequitur contest! Great! Your's is a pretty good starting gambit.
I'll reply "What is the airspeed of an an unladen swallow?"
You seem confused.
When 900 years old you reach, understand as good, you will not.
Quote from: Malthus on September 27, 2019, 01:52:17 PM
Quote from: Sheilbh on September 27, 2019, 01:41:40 PM
Quote from: Malthus on September 27, 2019, 10:09:22 AM
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'?
I'm not sure if it's his argument yet, because it's just a review. As I say I'm not sure on at least one point.
But your response is the Michael Young "Rise of the Meritocracy" which I think is true - and he coined the word meritocracy. Basically meritocracy wouldn't weaken classes but strengthen them, but they'd form on intellectual/meritocratic forms. Society would be unequal fairly, while the old system was unfairly unequal.
Yup, exactly.
Nothing wrong with an ideology of meritocracy. Alone, however, it can lead to bad results - if inequality leads to the "losers" suffering. What is needed is an ideology that suffering should not be tolerated, alongside the ideology of meritocracy. The "winners", however fair their "win" may be, must be under obligation to support the "losers", however 'undeserving'.
My favoured society would see a fair meritocracy tempered by an ethic of obligation.
I think Sam Harris has had several podcasts where he addresses the idea of "merit" which I found pretty compelling.
He pointed out that even our basic definition of "merit" is really pretty much bullshit. We say someone is deserving because what exactly? They are smart? Driven? Ambitious? Good looking? Athletic?
Almost none of these traits are actually anything that most of us have ANY control over - they are still just luck. I am damn smart. Did I do something to make myself smart? Nope. Just got lucky with the roll of the genetic dice.
Even attributes that are more about how we behave than what we are - say, hard working. Or ambitious. Did we do anything to be born with the "hard working" attribute? Or the lazy attribute?
Or, god forbid, the "mentally ill" attribute?
Even in a theoretically perfect meritocracy, what is the merit based on other than, well...just luck. You are lucky to NOT be born a dumb, lazy, ugly asshole?
We should reward intelligence and hard work and creativity not because those people who have those traits "deserve" the rewards, but rather because we want to encourage them to do things that will advance human well being for everyone, whether they "deserve" it or not. It is a strictly *practical* approach. And if we could reward the smart, innovative people who drive efficiency with something that worked better than money, that would be just as well.
Quote from: Berkut on September 27, 2019, 04:47:48 PM
I think Sam Harris has had several podcasts where he addresses the idea of "merit" which I found pretty compelling.
He pointed out that even our basic definition of "merit" is really pretty much bullshit. We say someone is deserving because what exactly? They are smart? Driven? Ambitious? Good looking? Athletic?
Almost none of these traits are actually anything that most of us have ANY control over - they are still just luck. I am damn smart. Did I do something to make myself smart? Nope. Just got lucky with the roll of the genetic dice.
Even attributes that are more about how we behave than what we are - say, hard working. Or ambitious. Did we do anything to be born with the "hard working" attribute? Or the lazy attribute?
Or, god forbid, the "mentally ill" attribute?
Even in a theoretically perfect meritocracy, what is the merit based on other than, well...just luck. You are lucky to NOT be born a dumb, lazy, ugly asshole?
We should reward intelligence and hard work and creativity not because those people who have those traits "deserve" the rewards, but rather because we want to encourage them to do things that will advance human well being for everyone, whether they "deserve" it or not. It is a strictly *practical* approach. And if we could reward the smart, innovative people who drive efficiency with something that worked better than money, that would be just as well.
Three points on this:
1. This is a little theological - for example, is "hard work" really just luck, because I was born with the ability or disposition to work hard, or had that formed by my upbringing over which I had no control? This is just the whole 'free will vs. predestination' thing in modern day disguise, with the victory awarded to predestination.
2. This may well be true - that we ought to reward "merit" despite the fact no-one has free will (or to put it differently - the ability to demonstrate 'merit' is just a product of lucky genes, lucky upbringing, being born as a white male or part on another socially-favoured group, or whatever). This does not prove "merit" is bullshit, it just proves it lacks a moral dimension - that the inequality "earned" through "merit" is not a reward for being a better person, but merely an incentive to encourage people to display "merit", as you note. This doesn't really change much about meritocracy though. Meritocracy doesn't require a moral dimension.
3. Another way to encourage merit, besides payment of money, is reputational - as in hunter-gatherer societies. That does sort of presuppose that merit has a moral dimension, though.
Quote from: Sheilbh on September 27, 2019, 01:34:21 PM
But in Marxist terms it's not a need. What matters is the economic material forces in a society: they produce the cultural and social apparatus, which forms the ideology of the ruling class. The ruling class economically produces the ruling ideology. And I don't know but I think with Marx it's a fairly basic concept and to change it you need to change the underlying material forces because ideology is just a product of economic relations. So the move from Medieval Christianity to the Enlightenment just reflects the move from feudal to bourgeois economic relations.
Gramsci makes this a lot more sophisticated by basically talking about the ruling class produces and is subject to its own ideology and that the other classes in effect consent. So the state, civil society, intellectuals, the Church all produce the world of what is "natural". It's not as simple as in Marx and the ruling class believe this stuff just as much as everyone else. So part of the way to change this is to disrupt the cultural hegemony, which I think is what Fox heads mean when they're talking about cultural Marxism.
So I read the section about ideology in that review and to me, the examples given sounds very similar to Gramsci which is weird because Piketty is apparently in contrast to Marx and talking about a battle of ideologies and not a battle of classes. And I wonder if your point is right and what he's saying is basically about the primacy of politics, ideology isn't just a product of material forces but rather a political force which shapes material forces. Or that section could just be getting his argument wrong :mellow:
But this is just adding more superstructure to the premise I'm contesting. And to my way of thinking the premise is neither supported logically--is there something innate in human biology, psychology, etc., etc., that means only ruling classes will produce ideologies?--nor is it supported by historical evidence. Multitudes of ideologies have been espoused that do *not* legitimize the powerful. Marxism, Social Democracy, Utilitarianism, Rawlsian justice, etc.
Oh okay, on that I just think you're wrong :P
Sorry, as I wasn't really talking about that - I was just confused by the contrast to Marx. As ideology in Marxism isn't a set of political beliefs, it's more like culture - Marxism isn't an ideology in their language, neither is social democracy or utilitarianism.
But on your point Piketty says that every unequal society creates an ideology to justify inequality. But his idea is apparently that history is a "battle of ideologies". If it's a battle of ideologies then it's not just the ruling class that produces ideology.
Quote from: Berkut on September 27, 2019, 04:47:48 PM
Quote from: Malthus on September 27, 2019, 01:52:17 PM
Quote from: Sheilbh on September 27, 2019, 01:41:40 PM
Quote from: Malthus on September 27, 2019, 10:09:22 AM
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'?
I'm not sure if it's his argument yet, because it's just a review. As I say I'm not sure on at least one point.
But your response is the Michael Young "Rise of the Meritocracy" which I think is true - and he coined the word meritocracy. Basically meritocracy wouldn't weaken classes but strengthen them, but they'd form on intellectual/meritocratic forms. Society would be unequal fairly, while the old system was unfairly unequal.
Yup, exactly.
Nothing wrong with an ideology of meritocracy. Alone, however, it can lead to bad results - if inequality leads to the "losers" suffering. What is needed is an ideology that suffering should not be tolerated, alongside the ideology of meritocracy. The "winners", however fair their "win" may be, must be under obligation to support the "losers", however 'undeserving'.
My favoured society would see a fair meritocracy tempered by an ethic of obligation.
I think Sam Harris has had several podcasts where he addresses the idea of "merit" which I found pretty compelling.
He pointed out that even our basic definition of "merit" is really pretty much bullshit. We say someone is deserving because what exactly? They are smart? Driven? Ambitious? Good looking? Athletic?
Almost none of these traits are actually anything that most of us have ANY control over - they are still just luck. I am damn smart. Did I do something to make myself smart? Nope. Just got lucky with the roll of the genetic dice.
Even attributes that are more about how we behave than what we are - say, hard working. Or ambitious. Did we do anything to be born with the "hard working" attribute? Or the lazy attribute?
Or, god forbid, the "mentally ill" attribute?
Even in a theoretically perfect meritocracy, what is the merit based on other than, well...just luck. You are lucky to NOT be born a dumb, lazy, ugly asshole?
We should reward intelligence and hard work and creativity not because those people who have those traits "deserve" the rewards, but rather because we want to encourage them to do things that will advance human well being for everyone, whether they "deserve" it or not. It is a strictly *practical* approach. And if we could reward the smart, innovative people who drive efficiency with something that worked better than money, that would be just as well.
Sam Harris sounds like an immature thinker with an unusual image of meritocracy.
Quote from: Sheilbh on September 27, 2019, 05:34:19 PM
Oh okay, on that I just think you're wrong :P
Sorry, as I wasn't really talking about that - I was just confused by the contrast to Marx. As ideology in Marxism isn't a set of political beliefs, it's more like culture - Marxism isn't an ideology in their language, neither is social democracy or utilitarianism.
But on your point Piketty says that every unequal society creates an ideology to justify inequality. But his idea is apparently that history is a "battle of ideologies". If it's a battle of ideologies then it's not just the ruling class that produces ideology.
OK. I think this particular sub-conversation has run its course. :)
Quote from: Eddie Teach on September 27, 2019, 03:43:18 PM
Quote from: The Brain on September 27, 2019, 11:59:11 AM
Quote from: grumbler on September 27, 2019, 11:54:06 AM
Quote from: The Brain on September 27, 2019, 11:40:30 AM
Quote from: grumbler on September 27, 2019, 09:49:47 AM
Quote from: The Brain on September 27, 2019, 09:02:28 AM
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.
Many people are of a different generation from their children.
Oooh! It's a non-sequitur contest! Great! Your's is a pretty good starting gambit.
I'll reply "What is the airspeed of an an unladen swallow?"
You seem confused.
When 900 years old you reach, understand as good, you will not.
That's not a non sequitur, and so not a valid entry in The Brain's game.
An informative piece on how regressive the American tax system is and has been for some time.
https://www.nytimes.com/2019/10/11/opinion/sunday/wealth-income-tax-rate.html?action=click&module=Opinion&pgtype=Homepage
I think Berkut's guy has a point.
When I was scanning through this thread and saw the inheritance tax discussion, in the context of increasing meritocracy, I thought that's pretty cool, once that's sorted all we will have left is limiting other inherited advantages.
For example, we could ban people with absolute hearing from attending music schools.
Also, tall people like CC should be banned from basketball.
Bad analogy. A trust fund kid needs to do absolutely nothing to be rich. A tall kid needs to put in years of practice and two a days and even then may end up an average basketball player. I know from personal experience :D
Quote from: Tamas on October 11, 2019, 08:41:15 AM
I think Berkut's guy has a point.
When I was scanning through this thread and saw the inheritance tax discussion, in the context of increasing meritocracy, I thought that's pretty cool, once that's sorted all we will have left is limiting other inherited advantages.
For example, we could ban people with absolute hearing from attending music schools.
Also, tall people like CC should be banned from basketball.
Nice strawman.
"My guy" makes no such conclusions.
Stating facts doesn't create conclusions. Have you ever heard the term cognitive dissonance?
Quote from: crazy canuck on October 11, 2019, 08:53:06 AM
Bad analogy. A trust fund kid needs to do absolutely nothing to be rich. A tall kid needs to put in years of practice and two a days and even then may end up an average basketball player. I know from personal experience :D
Yes but if I put in the same effort, with my shorter statue and messed up knees, I won't reach your results :contract:
I'm about 35 pages into the new book. Going to take a while.
Quote from: Tamas on October 11, 2019, 10:18:44 AM
Quote from: crazy canuck on October 11, 2019, 08:53:06 AM
Bad analogy. A trust fund kid needs to do absolutely nothing to be rich. A tall kid needs to put in years of practice and two a days and even then may end up an average basketball player. I know from personal experience :D
Yes but if I put in the same effort, with my shorter statue and messed up knees, I won't reach your results :contract:
Is there a point in here somewhere?
Quote from: Berkut on October 11, 2019, 11:05:15 AM
Quote from: Tamas on October 11, 2019, 10:18:44 AM
Quote from: crazy canuck on October 11, 2019, 08:53:06 AM
Bad analogy. A trust fund kid needs to do absolutely nothing to be rich. A tall kid needs to put in years of practice and two a days and even then may end up an average basketball player. I know from personal experience :D
Yes but if I put in the same effort, with my shorter statue and messed up knees, I won't reach your results :contract:
Is there a point in here somewhere?
Actually, it was more like a rant, not a point-making exercise, per se.
Quote from: The Minsky Moment on October 11, 2019, 11:03:03 AM
I'm about 35 pages into the new book. Going to take a while.
I need to wait until March for the translation. :(
Quote from: Tamas on October 11, 2019, 10:18:44 AM
Quote from: crazy canuck on October 11, 2019, 08:53:06 AM
Bad analogy. A trust fund kid needs to do absolutely nothing to be rich. A tall kid needs to put in years of practice and two a days and even then may end up an average basketball player. I know from personal experience :D
Yes but if I put in the same effort, with my shorter statue and messed up knees, I won't reach your results :contract:
Plenty of basketball players were both shorter and better than I was. You can also sit on a plane or compact car much better than I can :P
Quote from: crazy canuck on October 11, 2019, 12:06:05 PM
Quote from: The Minsky Moment on October 11, 2019, 11:03:03 AM
I'm about 35 pages into the new book. Going to take a while.
I need to wait until March for the translation. :(
Canadian English isn't that bad, is it?
Quote from: The Minsky Moment on October 11, 2019, 11:03:03 AM
I'm about 35 pages into the new book. Going to take a while.
Just bought it.
Quote from: Habbaku on October 11, 2019, 12:47:40 PM
Quote from: crazy canuck on October 11, 2019, 12:06:05 PM
Quote from: The Minsky Moment on October 11, 2019, 11:03:03 AM
I'm about 35 pages into the new book. Going to take a while.
I need to wait until March for the translation. :(
Canadian English isn't that bad, is it?
Ah, when I checked I thought I saw the translation was coming out then.