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Piketty for Ghosts of Tom Joad Readers
Unlike that guy who cornered you at the party, I’ll admit I haven’t read all ten million pages (it’s actually 700 pages) of economist Thomas Piketty’s new bestseller, Capital in the Twenty-First Century. I’ve read a bunch of it, and skimmed more it, and so here are the takeaways for people who are also reading my book about America, our society and our economy, Ghosts of Tom Joad
What Piketty says:
— There has been a significant increase in income inequality in America. Our inequality rate is higher than it ever has been in our own history, is growing, and is higher than in countries in Western Europe and Canada.
— The inequality is driven by two complementary forces. By owning more and more of everything (capital) rich people have a mechanism to keep getting richer, because the rate of return on investment is a higher percentage than the rate of economic growth. This is expressed in Piketty’s now-famous equation R > G. The author claims top of layer of wealth distribution is rising at 6-7 percent a year, more than three times faster than the size of the economy.
— [NOTE: In the United States, the top one percent own 35 percent of all capital, and the top 10 percent of wealth holders own roughly 70 percent. The bottom 50 percent have roughly 5 percent. Note also that until slavery was ended in the United States, human beings were also considered capital.]
— At the same time, wages for middle and lower income people are sinking, driven by factors largely in control of the wealthy, such as technology employed to eliminate human jobs, unions being crushed and decline in the inflation-adjusted minimum wage more and more Americans now depend on for their survival.
— All of this is exacerbated by America’s lower tax rate on capital gains (how the rich make their money) versus wages (how the 99 percent make their money.) This all becomes a kind of snowball effect.
— Because rich people pass on their wealth to their relatives, the children of rich people are born rich and unless they get really into hookers and blow, will inevitably get richer. They almost can’t help it. The gap between the 1 percent and the 99 percent must grow. This will create a society reminiscent of the pre-Enlightenment past.
— About the only way to change this is either via world-wide cataclysmic events such as wars, or by alterations in tax policy, specifically a progressive tax that really charges rich people more than poor people. Piketty does not seem to address the issue that many rich people profit mightily from wars, but either way, these cataclysmic events are transitory. It is not clear how Piketty sees a more fair tax system coming into play, but he seems very optimistic it will happen.
— Social reforms, such as increased education opportunities and low-cost health care, are incapable without tax changes of significantly affecting income equality.
— All of this is based on A LOT of data. Much of it is historical data, so the overall arguments are not some politically-vulnerable factoid-based stuff.
— A good Piketty quote: “The entrepreneur inevitably tends to become a rentier, more and more dominant over those who own nothing but their labor… Once constituted, capital reproduces itself faster than output increases. The past devours the future.”
Copyright © 2020. All rights reserved. The views expressed here are solely those of the author(s) in their private capacity.
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Rich Bauer said...
1Back to the Future: Only after the Great Depression affected the wealthy too was there a government mandate for their whores in Congress to make economic change. That obviously is not the case this time as the current depression affects the working poor.
05/12/14 2:02 PM | Comment Link
Kyzl Orda said...
2Trailing the ghosts of Tom Joad, are those of Blackwater. What happens when the playing field is leveled and the corrupt are protected —
In today’s New York Times (‘Trying to Salvage Remains of Blackwater Case’). This concerns that incident where Blackwater deliberately and indiscriminately shot at Iraqi citizens and subsequent case that was filed to bring them to court. At issue — the Prosecution’s case is being/has been unraveled:
“… But from the beginning, investigators said, they felt their case was being undermined. A State Department security agent reported that, shortly after the shooting, his colleagues had gathered up shell casings, trying to clean up the scene to protect Blackwater. The agent, David Farrington, recalled a meeting in which other State Department officials said, “We’ve got enough to get these guys off now,” according to court testimony.
State Department investigators also gave limited immunity to the Blackwater contractors in exchange for statements about the shooting. After someone leaked those statements to reporters, the investigators tried to make sure that none of their witnesses were influenced by those statements, which could not be used as evidence.”
http://www.nytimes.com/2014/05/12/us/trying-to-salvage-remains-of-blackwater-case.html?hp&_r=0
05/12/14 3:59 PM | Comment Link
Kyzl Orda said...
3Remember the OIG report on Diplomatic Security investigations issued last February that noted there was ‘potential’ for undue interference from higher ups? It was interestingly worded, and I have to go back and find the page number again but it was stated in that report definitely
The Blackwater shooting, at issue in this case Nissour Square, is from 2007
On a side note, but continuing a bad pattern of protecting bad behaviour, apparently the officials placed on admin leave following the Benghazi attack, are back at their State desks
05/12/14 4:12 PM | Comment Link
meloveconsullongtime said...
4Yeah that’s good, but then also – seriously, Peter (et al) – here’s another professional economist who disagrees with Picketty, because he thinks Picketty UNDERestimates how bad the situation really is!:
“Well, that’s why the neoliberals love Piketty. That’s why Krugman loves Piketty. You can’t implement it. So he’s produced a book without any solution, and the free enterprise boys like that. The 1 percent don’t mind being criticized as long as there’s no solution to their problem.”
http://michael-hudson.com/2014/04/the-1-and-piketty/
05/12/14 4:21 PM | Comment Link
meloveconsullongtime said...
5PS to my above comment:
Once again – as happens often vis a vis my comments on this blog, among our community of friends of Peter – I am once again in the paradoxical position of being a hard core Catholic who believes Karl Marx was right about a lot of things.
In light of which, once again I re-post THIS very smart, nine minute cartoon, the “Communist Manifestoon”, and as a hard core, totally orthodox Catholic, I can say I agree with around 90 percent of this:
http://www.youtube.com/watch?v=NbTIJ9_bLP4
05/12/14 4:25 PM | Comment Link
meloveconsullongtime said...
6And here’s Pope Francis saying, “Idolizing money is the root of all evil!”:
http://www.youtube.com/watch?v=t37ctIJwSy0
05/12/14 5:56 PM | Comment Link
meloveconsullongtime said...
7And here’s Jesus Christ talking back to the US Department of Justice:
http://www.youtube.com/watch?v=mD–lHALcm0
05/12/14 6:01 PM | Comment Link
pitchfork said...
8quote”And here’s Pope Francis saying, “Idolizing money is the root of all evil!”:”unquote
In that case melove, please tell me when the Vatican plans on distributing the $Billions the Vatican holds right now, to the poor of this planet, hmmmmm? Artwork alone, should about feed this planet for say…oh I don’t know, maybe a millineum? Or, the Pope could start by selling a few of those precious gems..hmmmmm?
Spare me.
05/12/14 6:06 PM | Comment Link
pitchfork said...
9quote”The 1 percent don’t mind being criticized as long as there’s no solution to their problem.”unquote
Bullshit. There IS a solution. Even Piketty suggested it, which is WHY the 1% ARE getting nervous..hence the blowback by 1% sycophants. All it will take is the Corporate whores who step over the line and decide to squeeze a little harder whereby the 99% start to STARVE….hence…
quote”And as Piketty’s book makes so uncomfortably clear, it’s likely to get worse before it gets better. No wonder I saw an advertisement for a storage company on the subway the other day that read, “The French aristocracy didn’t see it coming, either.”
That’s one of Piketty’s biggest messages–inequality will slowly but surely undermine the population’s faith in the system. He doesn’t believe, as Marx did, that capitalism would simply burn itself out over time. In fact, he says that the more perfect and advanced markets become (at least, in economic terms), the better they work and the more fully they serve the rich. But he does believe that rising inequality leads to a less perfect union, and a likelihood of major social unrest that mirrors the sort that his native France went through in the late 1700s.”unquote
Indeed.. social unrest is a massive understatement. They start starving people in this country and you’ll see a revolution that’ll make the French look like a birthday party. After all..there are 300 fucking million guns ..in the HANDS of the 99%. The French only had pitchforks and guillotines. Indeed..they’re getting nervous. Look at the crackdown happening with LEO, DHS, NSA… youbetcha. I can’t wait to see them shaking in their boots..after a few of their progeny are BEHEADED.
05/12/14 6:19 PM | Comment Link
Rich Bauer said...
10Pitch,
As you know, I have no confidence in the presidense of the Dumbest Country on the Planet or the idiots who vote for the idiots. As for Piketty’s message –inequality will slowly but surely undermine the population’s faith in the system, the
liars-in-charge will feed US a diet of lies: “LET THEM EAT YELLOWCAKE.”
05/13/14 1:11 PM | Comment Link
Rich Bauer said...
11All the news that’s fit to print from the Dumbest Country in the Planet:
http://www.slate.com/articles/news_and_politics/jurisprudence/2014/05/death_penalty_in_america_how_the_push_to_abolish_capital_punishment_has.html
05/13/14 4:14 PM | Comment Link
Rich Bauer said...
12Hey, New York Times, Glenn Greenwald is making you look bad, as if you needed help:
http://antiwar.com/justin/justin051414.html
05/14/14 8:16 PM | Comment Link