I'm reading this now. It's pretty good, lots of data, and the basic premise comes down to this. Marx was right about capitalism, concentrating wealth to the point where it creates a systemic upheaval, that might be a revolution, it might be a populist majority like Venezuela saw, but right now wealth is being concentrated to a degree not seen since the gilded age. The idea that capitalism spread the wealth more evenly over time, was based on the data available, and from 1910 to 1950 wealth did become less concentrated, and that's when Simon Kuzmets published his data, and wealth continued to become less concentrated until the 1980's. But when you look at the larger data picture, wealth became more concentrated in every time period except 1910 to 1980, and that was because of the major shocks of two world wars, and the Great Depression. We are now back to 1910 levels of wealth disparity, and it's getting worse. So how do we head off the shocks that concentrated wealth produce, and get back to that era where wealth became more widely distributed?
Stop buying electronic gizmos and spending a substantial portion of your income on telecommunications/entertainment that have no verticality between producers and regular folks would be a good place to start.
The issue is this, when the after tax rate of return on capital exceeds the economic growth rate, the concentration of wealth increases. The US can expect growth to average around 1% for the next 50 years....
The first part is silly--the second part is even sillier. Inflation alone will grow the economy 1.5% per year.
Firm organisation is key. Resource-based theory of the firm indicates that there will always be market concentration in capitalism. Worker ownership then becomes the key means to avoid the problem (with unemployed resources within the firm then, rather driving inefficient firm growth, used to reduce work pressures)
GDP growth is the sum of population growth and output per capita growth. Output per capita grows about 1% a year (historically) If population growth stops (as it has in Western Europe, as it is doing in the US), that leaves growth equal to output per capita growth, which runs around 1%. Inflation isn't growth....
The capitalist mantra has always been that its rising tide will lift all boats, like the ocean. All Piketty does is point to historical data which indicates that capitalism is not really like the ocean after all.
Although the basic thesis is interesting, I think this was a policy (confiscatory taxes on the rich) first, then came the rationale. However I welcome any US politician to hold that book up and say that this is where we need to go.
Well I think he had arrived at a tax rate of 70% for the top bracket as being ideal, based on historical data and marginal utility theory. Certainly the economy performed much better when that tax rate was in place, and there wasn't a debt issue. This book comes at it in a different way, but what's right is right, and he calls for a global tax eliminate tax havens. There are other things in the book, we can expect economic growth to average around 1%, since economic growth is the sum of population growth and growth in per capita output. And population growth is stabilizing, even falling in Western Europe, and per capita output growth rarely exceeds 1%. And the big thing is that Marx was right about Capitalism tending to concentrate wealth, there was a period where the data showed the opposite, that capitalism spreads the wealth more evenly over time, but his data shows that was only true from 1910 to 1980, before that and after that it's all concentration ..
Then you see why I support this being part of the Democratic policy agenda. I hope every Democrat gets behind the ideas of this book.
So that we avoid a Marxist revolution? Because if Democrats supported the actual premise of this book, lower taxes and more benefits for most people, higher taxes for 1% of the people, they might find it would work....
Marxist Revolution? The US isn't in danger of a Marxist revolution. Here's my tell: Piketty is French and and in France President Hollande is trying to push through his 75% tax rate. I say, there is a good test case. Let's see how France does with those sort of tax rates for a couple of years and we'll have a better idea of it's effects. But that's just a policy perspective. From a political perspective I think the Democrats should make a promise to the American people that if they win the House, they will enact similar tax rates. Since their fortunes don't look good now anyway, why not throw a hail Mary to get progressives and other kooks motivated to come out for the election? And if that actually works, then I think the US deserves those tax rates.
Right now, France is doing better than the US in providing jobs to people in their prime working years. So is Sweden and Germany and Denmark, all those countries with big social safety nets (or hammocks as Paul Ryan likes to call them) The US has been conducting an experiment. We let unemployment benefits for the long term unemployed end January 1st. If the right is right, we'll see a big surge in employment as all those long term unemployed get jobs, because the only reason they were unemployed was to collect benefits, right? OK, over 4 months into this experiment in making people in tough shape more miserable, we have succeeded in making people in tough shape more miserable, they are still unemployed, so it wasn't the benefits was it?
Although I think unemployment if a very interesting subject, there are plenty of threads that already discuss that. I'm not sure why you decided to switch subjects. I mean, it sounds like we are on the same side as far wanting the Democrats to take up this manner of super high tax rates ala Piketty. I mean, that is what you want right?
They aren't super high tax rates, they are the tax rates that we used to have before we had huge deficits. And the nation prospered and people became wealthy, and the distribution of wealth became less concentrated as time went on. Since we've lowered the rates, we've run huge deficits, had spotty growth and have seen the erosion of the middle class, and the concentration of wealth increase. I'd like to see us return to a system that made things better for most people, as opposed to the current system that makes things much better for a few at the expense of the middle class.
You may as well put it down, being panned as full of errors and data cherry picking Piketty's Numbers Still Don't Add Up More errors exposed in a popular book on income inequality MORE FLAWS EXPOSED IN LEFTIST BEST-SELLER In a recent Journal op-ed, Harvard economist Martin Feldstein ticked off a series of errors in Thomas Piketty's "Capital in the Twenty-First Century." Now the UK's Financial Times also sees "data problems and errors" in the popular screed that has been lauded by economists including Paul Krugman. After reviewing Mr. Piketty's work, the Financial Times finds "unexplained entries in his spreadsheets, cherry picking data sources and transcription errors. Taken together, these problems seem to undermine his conclusion that wealth inequality is rising in the US and in Europe." Two weeks ago, Mr. Feldstein noted a series of fundamental errors, including those related to Mr. Piketty's practice of comparing the incomes of top earners with total national income. "National income excludes the value of government transfer payments including Social Security, health benefits and food stamps that are a large and growing part of the personal incomes of low- and middle-income households." Mr. Feldstein wrote that "Mr. Piketty's theoretical analysis starts with the correct fact that the rate of return on capital...exceeds the rate of growth of the economy. He then jumps to the false conclusion that this difference between the rate of return and the rate of growth leads through time to an ever-increasing inequality of wealth and of income unless the process is interrupted by depression, war or confiscatory taxation." "[Mr. Piketty's] conclusion about ever-increasing inequality could be correct if people lived forever. But they don't," observed the Harvard professor. "The result is that total wealth grows over time roughly in proportion to total income. Since 1960, the Federal Reserve flow-of-funds data report that real total household wealth in the U.S. has grown at 3.2% a year while the real total personal income calculated by the Department of Commerce grew at 3.3%." http://online.wsj.com/news/articles...0001424052702304587704579587700281380712.html - - - Updated - - - Haven't been following the unemployment numbers reports? That is exactly what is happening, as the benefits run out people seek jobs. - - - Updated - - - Go learn the difference between marginal and effective tax rates and then go study up on capital gains tax rates versus tax revenues.
Please, don't insult me with your myths. Our alleged higher tax rates had a lot more deductions along with those high rates, including a deduction for 3 martini lunches and interest on credit card debt. The effective tax rates are what counts when you have a system of loopholes. Raising higher end tax rates to 75% under our current tax laws would have a very different effect. However, as I've said consistently throughout this thread, I'm 100% behind you in getting the Democrats to run on this. You're welcome for the support.
Huh? Reagan invented the budget deficit eh? Crazy... but in any case, all the more reason to get EVERY Democratic candidate running this year to have a stated position on Piketty's thesis. Let's everyone get behind this!
There was no shortage of revenue, what don't you understand. Revenues increased dramatically after we recovered from the Carter economy and the the tax rate cuts went into effect. Now the real question, why did the Democrat congress pass and spend more than Reagan requested?
Nobody can make that claim based on historical data. You cannot link only the top tax rate to economic performance, the tax system is very complicated with multiple credits, refunds, deductions. The tax code is as much social engineering and political payback to crony's as a revenue source. Unless someone does a study which accounts for the numerous and constantly changing rates/credits/deductions/special carve outs, plus outside economic conditions (which influence peoples and businesses spending patterns) then nobody can state what you have stated above. That study has never been done because it is far too complex. Studies trying to correlate top tax rate alone to economic performance or federal tax revenue show no correlation. Are you sure you have that right? Growth per capita is normalized with respect to population to provide a measure independent of population changes. The per capita growth rate independent of inflation has ranged between -4.9% and +7.4%. That assumes we have had free markets and capitalism throughout that period. Over time, the system has been warped into what even liberal universities agree is an oligarchy. We do not have capitalism in the US any longer. What Piketty should conclude is that capitalism works, and that a heavy govt hand (the Fed, cronyism, social engineering, corruption, oligarchy) is a failure.
Output growth per capita can be much higher when it is catchup growth, after an economic shock, or an economy like China or India catching up with the developed countries, because the technology and the roadmap for that growth already exists. But for the leading countries, they have to invent the growth, and they are starting with a high base, so growth was higher following the shocks of the two world wars and the great depression, but on average, without population growth, 1% is pretty much the deal.
Start by eliminating all special privileges granted by government. Incorporation, limited liability, direct subsidies, regulation which restricts competition, licensing, IP and patents. Then we'll talk.