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I read Piketty's book, and some of the critical response. In my semi-educated opinion (I only have a Bachelor's in Economics), the criticisms failed to poke a h

I read Piketty's book, and some of the critical response. In my semi-educated opinion (I only have a Bachelor's in Economics), the criticisms failed to poke a hole in his main argument: that capitalism as a system is unegalitarian because it allows wealth to grow faster than economic output, resulting in increasing amounts of income inequality over time. >>But perhaps the greatest rebuke of Piketty to be found among academic economics is not contained in any of these overt or veiled attacks on his scholarship and interpretation, but rather in the deafening silence that greets it, as well as inequality in general, in broad swathes of the field—even to this day. The reason for this deafening silence is simple: the truth revealed by Piketty is inconvenient, and there are no easy solutions.

meowface 10y ago
But does that make it "net" less egalitarian than other economic systems (in practice), after accounting for all of the other advantages of capitalism? Kind of like Churchill's quote about how democracy is the worst form of government, except for all of the others that have been tried.
- thesagan 10y ago
  Maybe for now we can start walking a middle path and soften the blow of our current trajectory for a good chunk of displaced labor. Perhaps policymakers and institutional advisors can listen more to Piketty and start finding a path to stability in the medium term.
- ouid 10y ago
  There is no such system as "capitalism". I have not seen a definition of capitalism which was not either contradictory, or which relied on sufficiently general abstractions (utility instead of profit, social contracts and monopolies on force instead of states). The level of authoritarian control you would have to have over a society in order to prevent a system of government from forming would certainly itself qualify as a system of government. So free enterprise always generates some sort of governing actor, and any mandate that results is, by the transitive property, the result of free enterprise. Since all systems are ultimately the result of free enterprise and "rational" motives, it's hard to argue that "Capitalism" is anything but the trivial classifier, if it is well defined. I'd argue that the successful policies that Americans incorrectly attributed to the "capitalism" were actually attributable to the sort of meta-philosophy of pragmatism. Which is the philosophy of not really having a philosophy, and never letting any belief become sacred (A philosophy which we certainly do not adhere to now).
  - astrange 10y ago
    Surely capitalism has to do with the existence of capitalists who don't do labor? If Walmart's shareholders couldn't extract all surplus income from the company, the Walton family wouldn't be making an entire country's worth of store owners' income for doing no work.
  - geezerjay 10y ago
    > I have not seen a definition of capitalism which was not either contradictory, or which relied on sufficiently general abstractions (utility instead of profit, social contracts and monopolies on force instead of states). That's a very good point. When we see people complaining about capitalism, these critics are essentially targeted at rule of law and the recognition of a right to private property, and how states don't simply confiscate private property held by those subjectively labeled as "the rich".
  - deleted 9y ago
    [deleted]
- enraged_camel 10y ago
  Maybe. But the reality is clear: at the current trajectory, we are headed for another French Revolution. Some billionaires knows this too: http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014 http://www.politico.com/magazine/story/2014/06/the-pitchfork...
barrkel 10y ago
Indeed; I think people are out of ideas. "Right-thinking" people continue to believe in liberalizing economies, globalism and so on, and they've yet to come to terms with the backlash that's fueling people like Trump, UKIP / Brexit, Le Pen, and so on. There's no alternative idea on the horizon; we know socialism isn't very effective at much more than rent capture and corruption, and we know nationalism / protectionism ultimately makes economies non-competitive globally. But we don't have a solution to the problem of global capital chasing efficiency globally, and thereby hollowing out the middle of the income distribution in Western economies. A lot of ideas have been discredited, or at least played out. But there's still a constituency for those ideas, and there will continue to be until the orthodox "elites" come to terms with what's going on. (And they're not really elites; I count myself as one of them, as skilled developers are not at immediate risk of being outsourced and are not strongly bound to any one country. I'm still winning from the current economic system. But I can see that it can't continue, the majority won't stand for it.)
- charlesdm 10y ago
  Isn't this just a problem of living in an efficient, globalised society? In an efficient global economy, most of the middle class won't be required, because frankly, most of those jobs are useless and shouldn't even exist in the first place. We'll need the "low level" jobs, e.g. cleaners. Given the cost of automation, it's just not interesting enough to automate this. We'll also need the high level jobs, e.g. anything that requires significant (creative) thinking to some extent. Unique creative thought is probably the only thing that can't be automated at the moment. Most traditional middle class jobs can easily be simplified / removed / etc. For each job that's created in software development, two traditional ones will disappear. We're optimising the world. Tl;dr: Most people, imo, haven't realised the world is changing. The people voting Trump / UKIP / Brexit / Le Pen are (unless someone gives me a good argument) fools for thinking the people they elect can actually change things. I'm not saying they haven't been left behind, or there are no legit concerns, but to think these people can change things.. that's just ridiculous. For example: I dare say Trump doesn't give a flying fuck about what he had to do to get elected. He picked out 5 or 10 focus groups that would give him the necessary votes to win, and focused on those. He won't deliver. He just wanted to be president.
e40 10y ago
and there are no easy solutions From a problem-solving standpoint, I don't think the solutions are really that hard. I think some of them are downright easy. What's hard is getting anything done in the current environment. Perhaps that's what you meant, though.
logicallee 10y ago
In this comment I disagree with Piketty. It is written very rigorously, you must find a very careful deductive argument in it. (Otherwise it's useless.) So, the rest of this comment makes a very dense argument, first using a proxy argument and then switching in the actual argument. The proxy argument is correct but probably you don't like reading it. So just get through it like bitter medicine. So. Proxy argument. True statement: Computers are inherently unegalitarian because smarter people get more utility out of them. You simply cannot give the same amount of utility to a dumber and a smarter person at the same capital cost. So far you might be thinking "Huh? You're saying smarter people get more pleasure out of reading so the Internet is unequal? What the hell... Anyone can read, who cares if some people get more pleasure out of it and others less?" But the problem is that nearly the same argument applies to startups and creating wealth. Instead of utility (personal pleasure from the Internet), you are now discussing "access to the wheels of capitalism". Musk slept at the office and shared a computer. Sergey Brin is a Ukrainian immigrant. The reason these people have unequal results is because computers are inherently not egalitarian: smart people just get more out of them. You can't stop it, any more than you can stop smart people from getting more pleasure from reading. Can't be done. sorry. Here is a question Piketty didn't ask: what percent of dynastic, billionaire wealth was created in a single generation in America? Not addressed at all. [EDIT: removed reference to more information than is contained here. This comment contains all of the information to understand my point.]
- jackmott 10y ago
  it isn't at all clear what your point is.
  - logicallee 10y ago
    [I've removed this comment.]
    - taway_1212 10y ago
      I think people downvote you because your post had a zombo.com feel to it - it talks on and on about how great and to the point it is, with the actual point being rather hard to find. My reading is that your whole argument is this paragraph: > Here is a question Piketty didn't ask: what percent of dynastic, billionaire wealth was created in a single generation in America? I think it's a fair point, IIRC it was also raised during EconTalk discussion with Piketty (http://www.econtalk.org/archives/2014/09/thomas_piketty.html http://www.econtalk.org/archives/2014/09/thomas_piketty.html).
barking 10y ago
>there are no easy solutions What's so hard about shifting the burden of tax from income to wealth? Week after week having 30% of your income taken away is what prevents a lot of people from ever getting ahead.
- Terr_ 10y ago
  > What's so hard about shifting the burden of tax from income to wealth? Well, there are a bunch of practical difficulties, beyond just political will. First, "wealth" is much harder to cheaply and objectively quantify than cash income. The value is often very subjective, and changes over time and circumstance. Even a lot of "what's it worth right now" statements are flimsy: A guy might have X stock in a company worth $Y, but it's only a "if things go right" $Y because if you try to sell it all at once you'll cause a panic among investors and get fairly little for it. Lastly, it's much easier for people to hide their current wealth, when they have an incentive to lie about it and have years to do it in. You'd need a financial panopticon to make sure nobody's burying gold in their garden while telling the tax man they spent it all on expensive food.
  - lr4444lr 10y ago
    What do you think about Georgism? Land is difficult to move or hide, and is an inherently progressive form of taxation
- enraged_camel 10y ago
  Sure. But I want to correct you on one thing: the US median income is $52,000. While the marginal tax rate for that amount, when filing as a single, is 25%, the effective tax rate is only 19%. When filing jointly, it is 16%. You don't reach 30% effective rate (single) until you make $500,000, at which point you're pretty well off. :)
  - ryanwaggoner 10y ago
    True, but that ignores FICA, state income tax, city income tax (rare), sales tax, property tax, etc, etc. Granted, these aren't all income taxes, they have their own curves, etc, but still, paying an overall effective rate of 30% isn't that difficult.

meowface 10y ago

But does that make it "net" less egalitarian than other economic systems (in practice), after accounting for all of the other advantages of capitalism? Kind of like Churchill's quote about how democracy is the worst form of government, except for all of the others that have been tried.

thesagan 10y ago
Maybe for now we can start walking a middle path and soften the blow of our current trajectory for a good chunk of displaced labor. Perhaps policymakers and institutional advisors can listen more to Piketty and start finding a path to stability in the medium term.
ouid 10y ago
There is no such system as "capitalism". I have not seen a definition of capitalism which was not either contradictory, or which relied on sufficiently general abstractions (utility instead of profit, social contracts and monopolies on force instead of states). The level of authoritarian control you would have to have over a society in order to prevent a system of government from forming would certainly itself qualify as a system of government. So free enterprise always generates some sort of governing actor, and any mandate that results is, by the transitive property, the result of free enterprise. Since all systems are ultimately the result of free enterprise and "rational" motives, it's hard to argue that "Capitalism" is anything but the trivial classifier, if it is well defined. I'd argue that the successful policies that Americans incorrectly attributed to the "capitalism" were actually attributable to the sort of meta-philosophy of pragmatism. Which is the philosophy of not really having a philosophy, and never letting any belief become sacred (A philosophy which we certainly do not adhere to now).
- astrange 10y ago
  Surely capitalism has to do with the existence of capitalists who don't do labor? If Walmart's shareholders couldn't extract all surplus income from the company, the Walton family wouldn't be making an entire country's worth of store owners' income for doing no work.
- geezerjay 10y ago
  > I have not seen a definition of capitalism which was not either contradictory, or which relied on sufficiently general abstractions (utility instead of profit, social contracts and monopolies on force instead of states). That's a very good point. When we see people complaining about capitalism, these critics are essentially targeted at rule of law and the recognition of a right to private property, and how states don't simply confiscate private property held by those subjectively labeled as "the rich".
- deleted 9y ago
  [deleted]
enraged_camel 10y ago
Maybe. But the reality is clear: at the current trajectory, we are headed for another French Revolution. Some billionaires knows this too: http://www.politico.com/magazine/story/2014/06/the-pitchforks-are-coming-for-us-plutocrats-108014 http://www.politico.com/magazine/story/2014/06/the-pitchfork...

barrkel 10y ago

Indeed; I think people are out of ideas. "Right-thinking" people continue to believe in liberalizing economies, globalism and so on, and they've yet to come to terms with the backlash that's fueling people like Trump, UKIP / Brexit, Le Pen, and so on. There's no alternative idea on the horizon; we know socialism isn't very effective at much more than rent capture and corruption, and we know nationalism / protectionism ultimately makes economies non-competitive globally. But we don't have a solution to the problem of global capital chasing efficiency globally, and thereby hollowing out the middle of the income distribution in Western economies. A lot of ideas have been discredited, or at least played out. But there's still a constituency for those ideas, and there will continue to be until the orthodox "elites" come to terms with what's going on. (And they're not really elites; I count myself as one of them, as skilled developers are not at immediate risk of being outsourced and are not strongly bound to any one country. I'm still winning from the current economic system. But I can see that it can't continue, the majority won't stand for it.)

charlesdm 10y ago
Isn't this just a problem of living in an efficient, globalised society? In an efficient global economy, most of the middle class won't be required, because frankly, most of those jobs are useless and shouldn't even exist in the first place. We'll need the "low level" jobs, e.g. cleaners. Given the cost of automation, it's just not interesting enough to automate this. We'll also need the high level jobs, e.g. anything that requires significant (creative) thinking to some extent. Unique creative thought is probably the only thing that can't be automated at the moment. Most traditional middle class jobs can easily be simplified / removed / etc. For each job that's created in software development, two traditional ones will disappear. We're optimising the world. Tl;dr: Most people, imo, haven't realised the world is changing. The people voting Trump / UKIP / Brexit / Le Pen are (unless someone gives me a good argument) fools for thinking the people they elect can actually change things. I'm not saying they haven't been left behind, or there are no legit concerns, but to think these people can change things.. that's just ridiculous. For example: I dare say Trump doesn't give a flying fuck about what he had to do to get elected. He picked out 5 or 10 focus groups that would give him the necessary votes to win, and focused on those. He won't deliver. He just wanted to be president.

e40 10y ago

and there are no easy solutions From a problem-solving standpoint, I don't think the solutions are really that hard. I think some of them are downright easy. What's hard is getting anything done in the current environment. Perhaps that's what you meant, though.

logicallee 10y ago

In this comment I disagree with Piketty. It is written very rigorously, you must find a very careful deductive argument in it. (Otherwise it's useless.) So, the rest of this comment makes a very dense argument, first using a proxy argument and then switching in the actual argument. The proxy argument is correct but probably you don't like reading it. So just get through it like bitter medicine. So. Proxy argument. True statement: Computers are inherently unegalitarian because smarter people get more utility out of them. You simply cannot give the same amount of utility to a dumber and a smarter person at the same capital cost. So far you might be thinking "Huh? You're saying smarter people get more pleasure out of reading so the Internet is unequal? What the hell... Anyone can read, who cares if some people get more pleasure out of it and others less?" But the problem is that nearly the same argument applies to startups and creating wealth. Instead of utility (personal pleasure from the Internet), you are now discussing "access to the wheels of capitalism". Musk slept at the office and shared a computer. Sergey Brin is a Ukrainian immigrant. The reason these people have unequal results is because computers are inherently not egalitarian: smart people just get more out of them. You can't stop it, any more than you can stop smart people from getting more pleasure from reading. Can't be done. sorry. Here is a question Piketty didn't ask: what percent of dynastic, billionaire wealth was created in a single generation in America? Not addressed at all. [EDIT: removed reference to more information than is contained here. This comment contains all of the information to understand my point.]

jackmott 10y ago
it isn't at all clear what your point is.
- logicallee 10y ago
  [I've removed this comment.]
  - taway_1212 10y ago
    I think people downvote you because your post had a zombo.com feel to it - it talks on and on about how great and to the point it is, with the actual point being rather hard to find. My reading is that your whole argument is this paragraph: > Here is a question Piketty didn't ask: what percent of dynastic, billionaire wealth was created in a single generation in America? I think it's a fair point, IIRC it was also raised during EconTalk discussion with Piketty (http://www.econtalk.org/archives/2014/09/thomas_piketty.html http://www.econtalk.org/archives/2014/09/thomas_piketty.html).

barking 10y ago

>there are no easy solutions What's so hard about shifting the burden of tax from income to wealth? Week after week having 30% of your income taken away is what prevents a lot of people from ever getting ahead.

Terr_ 10y ago
> What's so hard about shifting the burden of tax from income to wealth? Well, there are a bunch of practical difficulties, beyond just political will. First, "wealth" is much harder to cheaply and objectively quantify than cash income. The value is often very subjective, and changes over time and circumstance. Even a lot of "what's it worth right now" statements are flimsy: A guy might have X stock in a company worth $Y, but it's only a "if things go right" $Y because if you try to sell it all at once you'll cause a panic among investors and get fairly little for it. Lastly, it's much easier for people to hide their current wealth, when they have an incentive to lie about it and have years to do it in. You'd need a financial panopticon to make sure nobody's burying gold in their garden while telling the tax man they spent it all on expensive food.
- lr4444lr 10y ago
  What do you think about Georgism? Land is difficult to move or hide, and is an inherently progressive form of taxation
enraged_camel 10y ago
Sure. But I want to correct you on one thing: the US median income is $52,000. While the marginal tax rate for that amount, when filing as a single, is 25%, the effective tax rate is only 19%. When filing jointly, it is 16%. You don't reach 30% effective rate (single) until you make $500,000, at which point you're pretty well off. :)
- ryanwaggoner 10y ago
  True, but that ignores FICA, state income tax, city income tax (rare), sales tax, property tax, etc, etc. Granted, these aren't all income taxes, they have their own curves, etc, but still, paying an overall effective rate of 30% isn't that difficult.