Posted on 01/03/2015 8:44:05 AM PST by Kaslin
French economist Thomas Piketty, author of the surprise best-selling Capital in the 21st Century turned down France's top award, the Legion D'Honneur.
"I do not think it is the government's role to decide who is honourable", said Piketty.
Nobel Prize-winning economist Paul Krugman called it "the most important economics book of the year - and maybe of the decade".
Krugman likely says that because he believes in Piketty's socialist solutions to income inequality.
Thomas Piketty's Capital Review
Piketty's book is a massive 696-page slog. Fortunately, Harvard Business Review offers this synopsis: Piketty’s “Capital,” in a Lot Less than 696 Pages.
The argument. Capital (which by Piketty’s definition is pretty much the same thing as wealth) has tended over time to grow faster than the overall economy. Income from capital is invariably much less evenly distributed than labor income. Together these amount to a powerful force for increasing inequality.Everything You Need to Know
The method. Piketty does not offer his own theory of what drives economic growth, or what the optimal ratio of capital to labor income might be. In fact, a recurring theme of his book is that the theory-first approach of modern economics is a dead-end.
The evidence. The richest source of data for the book is France, thanks to the country’s long tradition of excellent record-keeping and an estate tax that was enacted a couple of years after the 1789 Revolution. What the French numbers show is that the ratio of capital to income remained steady at about seven-to-one for centuries, plummeted around the start of World War I, and began recovering after World War II.
Piketty argues that the U.S. should consider a return to a “confiscatory” (his word) 80% top marginal tax rate even though it wouldn’t bring in much money (he basically agrees with Arthur Laffer on that), well, that provokes some thoughts, doesn’t it?
That capitalism is unfair has been said before. But it is the way Thomas Piketty says it – subtly but with relentless logic – that has sent rightwing economics into a frenzy, both here and in the US.Mish Comment: Already his thesis is suspect. One need only look at the developers of Google, Microsoft, and countless other extremely successful individuals who became the world's wealthiest by their actions, not their inheritance. Piketty attempts to explain this away later, but for now let's continue with the Guardian.
Piketty's argument is that, in an economy where the rate of return on capital outstrips the rate of growth, inherited wealth will always grow faster than earned wealth. So the fact that rich kids can swan aimlessly from gap year to internship to a job at father's bank/ministry/TV network – while the poor kids sweat into their barista uniforms – is not an accident: it is the system working normally.
If you get slow growth alongside better financial returns, then inherited wealth will, on average, "dominate wealth amassed from a lifetime's labour by a wide margin", says Piketty. Wealth will concentrate to levels incompatible with democracy, let alone social justice. Capitalism, in short, automatically creates levels of inequality that are unsustainable. The rising wealth of the 1% is neither a blip, nor rhetoric.
If he is right, the implications for capitalism are utterly negative: we face a low-growth capitalism, combined with high levels of inequality and low levels of social mobility. If you are not born into wealth to start with, life, for even for the best educated, will be like Jane Eyre without Mr Rochester.
To understand why the mainstream finds this proposition so annoying, you have to understand that "distribution" – the polite name for inequality – was thought to be a closed subject. Simon Kuznets, the Belarussian émigré who became a major figure in American economics, used the available data to show that, while societies become more unequal in the first stages of industrialisation, inequality subsides as they achieve maturity. This "Kuznets Curve" had been accepted by most parts of the economics profession until Piketty and his collaborators produced the evidence that it is false.Piketty's Solution
In fact, the curve goes in exactly the opposite direction: capitalism started out unequal, flattened inequality for much of the 20th century, but is now headed back towards Dickensian levels of inequality worldwide.
One of the most compelling chapters is Piketty's discussion of the near-universal rise of what he calls the "social state". The relentless growth in the proportion of national income consumed by the state, spent on universal services, pensions and benefits, he argues, is an irreversible feature of modern capitalism. He notes that redistribution has become a question of "rights to" things – healthcare and pensions – rather than simply a problem of taxation rates. His solution is a specific, progressive tax on private wealth: an exceptional tax on capital, possibly combined with the overt use of inflation.
“Will Piketty or Krugman address my rebuttal? Of course not. It does not meet their socialist agenda.”
HOORAY Mike Shedlock! Thanks for posting, Kaslin.
10. “Divide and govern”…
6. But the grand nostrum will be a public debt,…
11. As soon as sufficient progress in the intended change shall have been made, and the public mind duly prepared according to the rules already laid down, it will be proper to venture on another and a bolder step toward a removal of the constitutional landmarks.
http://www.constitution.org/cmt/freneau/republic2monarchy.htm
Socialism Is Legal Plunder - The Law; Bastiat
http://bastiat.org/en/the_law.html#SECTION_G022
If Thomas Piketty believes that people should pay more taxes he can lead by example and voluntarily send more money to his government. He can start paying more taxes RIGHT NOW, without any government action mandating it.
But he doesn’t do that, does he?
When we had something like a Free Market, we had fast growth, rising incomes for the poor, and lots of social mobility.
As the Progressives took over, as government got bigger, as we got more socialistic, we got low-growth capitalism, combined with high levels of inequality and low levels of social mobility.
But I guess that fact escapes them.
Life is unfair. Guess he missed that lesson
As unfair as this guy having recognition and Rush’s good books not getting a fair review from those who are unfairly believed to be unbiased,, I’d say
But doesn't he understand? It's a Major Award.
bingo!
Made by Fragi'li
Piketty is just another marxist who the media fawns over.
Tho it is surprising he rejects the govt honoring him since he would like it to be all powerful.
Why is it fascinating? It’s median income.
Paul Krugman praised his book, so, y’know. Thanks Kaslin.
French writer Pascal-Emmanuel Gobry in the Wall Street Journal, May 22, 2014:
http://www.wsj.com/articles/SB10001424052702303480304579575890128783848
“Thomas Piketty, a Not-So-Radical French Thinker: The economist and author of ‘Capital in the 21st Century’ may be causing a stir in the U.S., but his views are ho-hum in his own country”
“If Thomas Piketty believes that people should pay more taxes he can lead by example and voluntarily send more money to his government.”
It’s not about the money. It’s about the control, the power and the haughty ascension to god status that the
pretense of social justice provides.
IMHO
I agree completely. Despite all of their lingo, Leftists are not about ‘fairness’... they are about arrogant, Gog-like power of others. They are craven predators.
Bert’ rule....
the reason for income inequality is inequality of capability and effort.
Laziness breeds inequality
“They are craven predators.”
You’re being being too kind.
IMHO
Thanks for the ping; link.
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