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As someone who knows very little about economics personalities, could you explain how Pikkety and Varoufakis fit into this scheme?

• lifeisstillgood 11y ago
  There is a (re)surgence of left wing politics detectable as we move away from the old certainties of 20th C. The right is mired in a religious spiral and the left has yet to discover a seam of genuine connection across class to unite over. However it is clear that economics is changing and that class divisions will likely align along wealth. Pikkety is French economist who claims he proves that returns to capital are increasing faster than incomes. The means the rich will get richer faster. The last time this happened was Edwardian era (staving children in London, banquets on the Titanic, massive unrest). The wars of 20 C removed wealth from rich and reallocated it more fairly as democracy and technology spread. However it's going back. Varoufakis is left wing Greek economist (used to work for Valve) and became Greek finance minister when Greece elected a left wing government in January. Greece has been the European gateway to Middle East and Russia - it spends ten times average on military and when it joined the Euro (effectively a gold standard) it joined at wrong exchange rate - really badly wrong. Their economy was shot - Germany for example is able to import Greek olives and export more Greek olive oil than Greece does (Greeks have not invested in automation, their farm subsidies are against it, German farm subsidies fuck up a different part of German agriculture) Anyway Greece economy collapses - but they are in the Euro, so they can't make Greek Drachmas cheaper to help exports - so the only option is to pay people less (it's called internal devaluation or something) it is clearly a shit system for balancing out productivity across Europe What should happen is a federal agreement to reallocate funds through tax and spend and bonds. But federalism is political death in Europe. So a well meaning elite has for decades been pushing a European project - stop war happening again by building trade links, then improve trade by harmonising standards, then improve finance by using same currency, then we will join as a political union and never kill 100 million people again. Unfortunately the Euro is a gold standard and will kill you at the wrong exchange rate - and you can either have federal reallocation of funds (sensible but politically impossible) or you can force the people to take pay cuts till their productivity matches their income. Varoufakis has been pointing this out for years, then got elected and stood up to the European project and said this is economic madness, the people have given us a mandate, you can't manage the structural change like this. He probably called the German finance minister a Nazi during heated discussions. This all went down like a lead balloon - either Greece toed the line and dumped it's democratic mandated and got fucked over, or European project (peace not war) had to end. The Germans held the debt over Greeks till Greeks blinked first. So we have a Western economic consensus of austerity and "fudging" the worlds second largest currency, a renminbi that is based on spreadsheets massaged by politicians desperate to look good while Chine goes from industrial to manufacturing, and a willingness to overlook 1930s level suffering to keep from facing deep political divisions over federalism. At the same time Russia is trying to foment a war or two in order to grab something just East of Greece. Sorry I seem to have lost the thread and scrolling upwards on iPhone textbox is hard. So two left wing economists represent the zeitgeist - we are seeing greater returns to private capital (do you wonder why all those unicorns funded by A16Z have not IPOd? Because they can get as much cash as they want from sovereign funds and banks.) Greater returns to private capital, no left wing intellectual consensus on what is happening and democratic outpourings asking for debt relief are forced out of the way. Now with a new set of massive tech companies, who are making bets on far reaching changes, not because they are white elephants but because the industries that will wipe out today's global stars are already visible on radar, those industries are going to reward tech skills highly (and increase returns to capital) for say 20% of us, and then will break the social convention of sharing in increased wealth through regular jobs because robots will be doing the jobs. So it's a perfect storm of technology taking away jobs, no political will to get behind legitimate democratic discontent and meet difficult decisions about the structure of society, returns on capital making class divisions wider, and new forms of global companies being created without Public company style scrutiny, and without a global consensus on how to effectively tax such structures. We can use technology to usher in a golden age - the economics of technology almost mandate another century of massive wealth creation planet wide. But sharing that fairly and in a managed way is the challenge - and that challenge is represented by those two economists. Sorry - wall of text, unedited. Will come back to it after my no-procrast timeout !