Tuesday, February 24, 2015

Piketty: 'Nevermind'

Timothy Taylor summarizes the results of a symposium in the Journal of Economic Perspectives (which he edits):
In case you didn't catch all that, Piketty is noting that r>g is not useful for discussing income inequality, and does not necessarily lead to wealth inequality, and that the future of wealth inequality is highly uncertain.  
So, the best selling book Piketty published last year is...wrong...to have said; 
"This fundamental inequality [r > g] will play a crucial role in this book. In a sense, it sums up the overall logic of my conclusions."
And it's no longer the case that r>g is a fundamental force of divergence nor the fundamental tendencies of capitalist economies.

Not that that is going to dissuade Piketty from his promoting socialism, as he tells friends on the left;
All the big revolutions engendered a big tax reform. Take the French Revolution, the American Revolution, or World War One: although it was not a fiscal revolution initially, through the Bolshevik Revolution, it had a huge impact on the acceptance of a progressive tax regime and more generally social welfare institutions after World War One – and even more so after World War Two. These were fiercely opposed by the elite and by the right just before these shocks, so this shows that we need a big fight and sometimes violent shocks to make progressive tax accepted. It would be a big mistake to think of progressive taxation as a technocratic process that comes quietly from a minister and experts. This is not at all the history of taxation.
Piketty likes his omelettes made with broken eggs.
I think we also need to have new forms of governance and capital ownership. For instance, in the book I mention the difference between the private and social value of capital in corporations .... Therefore developing new forms of ownership, new forms of sharing of power between those who own capital and those who own their labor, is extremely important to me. .... We need progressive taxation of private capital, and at the same time, a new thinking of what capital ownership means and how we organize its owners.
Does that mean he is going to give back his millions of dollars and euros in royalties?

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