Piketty’s data
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Denouncing or at least describing inequality seems to be the flavour of the month. Here's an extract from yesterday's London Evening Standard by their economics editor Anthony Hilton headed "Inequality is the real challenge for the economy" and subtitled "The next set of output figures should top pre-recession levels — but it is good news only for a privileged few" and "We now live in an economy where the rewards from growth or globalisation go to an ever narrower elite":
Quote:the defining feature of the age is the return of inequality. Most of the last century saw a steady narrowing of the gap between the rich and poor in society. This century has seen it widening again. Executives who in the 1990s were content to earn 20 times the wage of their lowest-paid employees now expect to earn 200 times — and pay a lower rate of tax into the bargain. And they are not alone.The full article can be read here (Piketty is not mentioned):http://www.standard.co.uk/comment/anthony-hilton-inequality-is-the-real-challenge-for-the-economy-9625535.htmlHe doesn't seem to think much is likely to be done about it either.
alanjjohnstone wrote:More the reason to expose the weak policy that Piketty advocates, his inconsistency as ALB pointed out, and perhaps we could call it what it is, political cowardice, that he won't take his own findings to their logical conclusion and condemn capitalism per se.I don't think the term 'political cowardice' is correct, ajj.The 'weakness, inconsistency and illogic' are simply fundamental features of 'reformism'.And the whole purpose of reformism is to avoid the condemnation of capitalism.I think many reformists are brave politicians (on a personal level), even though clearly some are liars and war criminals (step forward, Blair!), but, simply, they are not Communists.What makes people Communist? Well, that's the $64,000 question, and has been since Charlie and Fred were writing.If I was to proffer a reason for Piketty's lack of understanding, I'd just put it down to him not being too bright – I've met professors, you see!
Quote:Denouncing or at least describing inequality seems to be the flavour of the month.My recollection is that it has been going on for a few years now. From Occupy Wall St and the 1%. Piketty and Saez have been pushing their stats for a while and as i mentioned before Stiglitz and Robert Reich have been cheerleading the inequality reform brigade against the CEOs with regular articles. Mostly what i have been asking for since this thread began is a much more determined attack on Piketty as it was easily foreseen that people were latching on to his book like leeches. All along i have been repeating ..so what if the book is a fine piece of research and according to one the best thing since slice bread, it was aways going to be his policy recommendations that would be focused upon. And that was not assisting the socialist case but was a disservice, and merely confirmed what we already knew without any requirement of equations…the rich get richer, the poor get poorer.Instead it is now the book that advocates wealth tax and inheritance taxes…and his caveats that he didn't think it can work in one country due to capital flight…and he thought it utopian to think it would be implemented world-wide, is all but forgotten as always the small-print exclusion clauses in an insurance policy … And this book ensures that capitalism goes on and on with another forlorn hope..The World Bank, IMF, OECD, can produce all the academic reports they wish that we are globally becoming "middle class"…that poverty is being reduced …But it doesn't match peoples reality or meet their expectations.
alanjjohnstone wrote:All along i have been repeating ..so what if the book is a fine piece of research and according to one the best thing since slice bread, it was… not assisting the socialist case but was a disservice, and merely confirmed what we already knew without any requirement of equations…the rich get richer, the poor get poorer…… And this book ensures that capitalism goes on and on with another forlorn hope…This is just about my estimation of the book, too, ajj.Academically, perhaps 'a fine piece of research'.But… it doesn't 'assist the socialist case', it 'merely confirms what we already knew', and the most acute of your observations, Alan, 'this book ensures that capitalism goes on and on with another forlorn hope'.Piketty's book provides what we would estimate as 'forlorn hope', for the reformists, that is, yet another deckchair re-arrangement on the Titanic. Us lot in steerage have little to learn from studying the Titanic's First Class, return trip, seating plan.
Piketty is a reformist but at least he's not an underconsumptionist like Hilton and, apparently, Larry Summers:
Quote:The problem is that it is not at all easy to see how this is going to change, which is why some of the more far-sighted economists — like Larry Summers, the one-time US Treasury Secretary — talk a lot about the threat of secular stagnation. In essence he sees decades of slow growth because there will not be enough money in the pockets of the mass of the people to buy what the world could produce if it was operating at its full potential. Operating below capacity in human terms means huge persistent unemployment for the really unfortunate and under-employment and low pay for very many more.Is Piketty then a lesser evil? Is that what you are trying to infer, ALB?Didn't YMS pull up LBird for random name-dropping?
The discussion about the latest figures for GDP in the UK, which show that they have reached (after 6-7 years) their pre-crisis level, brings out what Piketty means by g (growth) in his formula r (rate of return on capital) > growth. He means not crude GDP but GDP per capita (per head of population). This makes a difference.UK GDP has indeed reached its pre-2008 level but, as has been pointed out, GDP per head of population is not expected to reach its pre-crisis level for another three years (because of course the population has increased since then).By defining g as GDP per capita rather than simple GDP (which would be more logical and what most people might understand by it) Piketty makes "growth" slower, which suits his argument better about the slower the growth the more the inequality of wealth ownership.It is as well to be aware of the two different meanings of "growth".
The economic book and the economic formula Steve Keen is praising.https://www.businessspectator.com.au/article/2014/7/28/global-news/why-super-rich-are-running-scared-inequalityHis review has a great line
Quote:When the poor and the dispossessed complain about inequality, it’s only to be expected. But when part of the top 1 per cent of the top 1 per cent complain about it, it is truly time to worry — and preferably to act.George Monbiot endorses the Greens and cites Piketty.http://www.theguardian.com/commentisfree/2014/jul/29/rich-wealth-good-inequality-green-partyPiketty's own self scepticism about his solutions is simply brushed aside as a mere technicality
Quote:"…this is seen as one step towards the ideal position: a global wealth tax, that treats capital equally, wherever it might lodge. Rough as this proposal is, it will start to challenge the political consensus and draw people who thought they had nowhere to turn… You wanted a progressive alternative? You’ve got it."Socialism as an alternative?? …er…umm…Piketty has given new life to every reformist out there. Capitalism can now be re-born. He has done a "Keynes" on socialism and temporarily set back any progress as people now begin to struggle futilely for tax reform. Some say (well Lbird would and me) that was indeed his purpose and motivation and intention because of his own ideological political position and it has not been an unintentional consequence of his "neutrality" as a "scientific" researcher.
I agree that it's a fair point to say that Piketty's has provided a theoretical justification for reforms that the Left were advocating anyway just as Keynes did in the 1930s. Whether his intention is to "save capitalism" by diverting attention and activity from campaigning for socialism is more debatable. I doubt it but it doesn't really matter. In any event, he doesn't appear to think that realistically capitalism can be saved from itself.
It seems that the 1% or perhaps the 0.1% or maybe even the 0.01% recognise the political advantages of reducing inequality to save themselves. http://www.valuewalk.com/2014/07/paul-singer-warns-of-social-unrest-if-inequality-unaddressed/http://www.thefiscaltimes.com/Columns/2014/07/29/Why-Rich-Should-Call-Income-RedistributionCan be added to Steve Keen quote i provided earlierOf course, you are right, whether Piketty deliberately set out to reveal the extent of inequality and the future trend if action is not taken to defend the privileged few is up for debate. But intentionally or not the objective result of his work is it is being used as a theoretical justification for just that, side-tracking any possible hope socialist have of exposing capitalism as inherently flawed and beyond repair …Now we have all sorts out to save capitalism and maintain a socially acceptable level of inequality and inherited wealth and all citing Piketty. I think we have been a bit tardy in formulating a response…(maybe the upcoming Standard has an appropriate article)…but we should have issued a statement and used the Media Committee to disseminate it, high-lighting the conclusion you reached about the book being inconsistent in its conclusion and placing it alongside the under-consumptionist theories as mistaken remedies for government intervention to mend capitalism. Certainly just as Occupy and Brand have done, Piketty has created openings for ourselves to take the opportunity to take advantage of for our own views…but even allowing for the fact that we have limited audience, we aren't making enough of even that. A door might have opened but we havn't got a foot in to stop it being slammed in our faces. A detailed rebuttal of Piketty is required and needs to be disseminated widely i would have added quickly , but that is too late now. This wealth tax idea and the earlier Robin Hood/Tobin tax will be peddled far and wide as a non-revolutionary alternative to fix the system.
This article, if i read it right, says a good welfare state disproves Piketty, well, at least in Ireland's case. http://www.irishtimes.com/business/economy/why-piketty-s-inequality-arguments-don-t-apply-to-ireland-1.1881531That nagging feeling i get when i read something i think is suspect is with me again in this apparent rebuttal. But if true then it is once more strengthening the case of the reformists, so either pro or anti-Piketty we are not seeing much thoght given to socialism
The Irish article is about the distribution of income whereas, for us, the key factor is the distribution of wealth. To a large extent the distribution of income (which is less unequal than the distribution of wealth, which itself is less unequal than the distribution of income-yielding assets) is a consequence of the distribution of wealth, with a big chunk going as property income to the property owners.
From this reviewhttp://www.moroccoworldnews.com/2014/08/135920/where-is-capital-in-the-twenty-first-century/
Quote:"…Instead of taxing flows of money, stocks of money should be taxed, i.e. things like capital, land and assets. An innovative economy depends on capital chasing higher rates of return, which entails committing itself to more risk as well. A tax on capital is really a tax on idle capital (i.e: for any given level of capital taxation, a capitalist who has a higher return of investment will pay relatively less tax than someone with a lower return on investment, whereas if you have a tax on capital gains, the bad capitalist and the good capitalist will pay the same tax rate…this quote aptly sums up his project: “my point is not at all to destroy wealth. My point is to increase wealth mobility and to increase access to wealth.” "ALB wrote:UK GDP has indeed reached its pre-2008 level but, as has been pointed out, GDP per head of population is not expected to reach its pre-crisis level for another three years (because of course the population has increased since then).Confirmation of this in an article in the Independent a couple of days ago:http://www.independent.co.uk/news/business/news/britain-facing-lost-decade-of-economic-growth-9647817.html
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