French economist Thomas Piketty is raising a ruckus

[RobDownSouth]

So third time .... Why would we still be in recession?


Or is your lack of answering proof that you have no clue....

Because the stock market didn't recover the ground it'd lost until last year.

Had Dubya succeeded in sabotaging America in 2006-2007, everything invested in a stock portfolio would have lost over a third of its value immediately (35%) when the Bush Recession hit.

The next year the market rebounded 25%, still in negative territory for two years.

It took basically 5 years to get back to positive territory...and that was for a minimal overall gain.

Keep in mind, too, that in the interim the government would not have allowed people to starve to death due to a sudden drop in the stock market. A much larger bailout than the stimulus would have been required, and the spectre of depression was very real.

Bottom line: the inherent risk associated with stock market speculation is massive compared to the meager 0.5% additional return.

Spin that.

 

[Amberchgo]

Because the stock market didn't recover the ground it'd lost until last year.

Had Dubya succeeded in sabotaging America in 2006-2007, everything invested in a stock portfolio would have lost over a third of its value immediately (35%) when the Bush Recession hit.

The next year the market rebounded 25%, still in negative territory for two years.

It took basically 5 years to get back to positive territory...and that was for a minimal overall gain.

Keep in mind, too, that in the interim the government would not have allowed people to starve to death due to a sudden drop in the stock market. A much larger bailout than the stimulus would have been required, and the spectre of depression was very real.

Bottom line: the inherent risk associated with stock market speculation is massive compared to the meager 0.5% additional return.

Spin that.

Thanks. I figured you didn't understand privatization either. Just needed your confirmation.

Appreciate it.

 

[BoyNextDoor]

Thanks. I figured you didn't understand privatization either. Just needed your confirmation.

Appreciate it.

What is your understanding of it? I also thought it was a move to invest the SSTF in a mix of bonds and mutual funds.

 

[KingOrfeo]

So income disparity is a crime? Which law are they breaking. State or Federal?

Crime or not, it is very definitely a problem. And, according to Piketty, the problem is less income disparity than capital disparity.

 

[KingOrfeo]

If you're cool with Marx's version on communism, that's fine. Just come out and say that.

That's not the only version out there. It never was.

 

[RobDownSouth]

Thanks. I ...didn't understand privatization... Just needed your confirmation.

Appreciate it.

Apology accepted.

 

[Graf_Severin]

Great quote: Abraham Lincoln said, “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”

Sounds straight from the Communist Manifesto - per a Sean Hannity assessment, I imagine. [Note: edited from typo-ed "Community Manifesto," more of a suburban pamphlet I imagine.]

From Salon:

Sunday, Apr 27, 2014 06:59 AM EDT

Welcome to the Piketty revolution: “Capital in the 21st Century” is a game-changer (even if you never read it)

"Capital in the 21st Century" is an unexpected bestseller that could actually change the world

Sean McElwee

Anyone who’s anyone (and many more who aren’t) has written something this week about “Capital in the 21st Century,” the new treatise on income inequality by French economist Thomas Piketty.

The book was actually published early last month by Harvard University Press, but arrived to fanfare only within the insular, if august, community of economic policy researchers. So, on arrival, it might have seemed like the 700-page tome, with its academic tone and laboriously documented historical analyses, was destined to a life of obscurity. But then something strange happened. People — regular people — started to buy it in droves. By the time “Capital” surged to the top of the charts this week — so many physical copies of the book were sold that Amazon actually ran out of inventory — Thomas Piketty had become the most famous economist this side of Paul Krugman, celebrated on the left and reviled on the right.

At this point, a review or discussion of “Capital” is almost a rite of passage for an aspiring wonk. (You can read this writer’s here.) But the one question that hangs over Piketty’s meteoric rise is, in a way, the most obvious one: What does any of this actually mean?

First off, Piketty is a symbol of the increasing consensus among academic economists and political scientists about inequality and democracy. This consensus, which has been demonstrated in innumerable studies, reports and books already, establishes a few propositions: Inequality has been increasing in the United States over the past three decades. This inequality has been defined particularly by an explosion among the very top, be it the 1 percent or the 0.1 percent (or even the .01 percent). This concentration of economic power has coincided with an increase in political power for the wealthiest Americans. There are still some ideologues who dispute these points, but there are ideologues who still dispute evolution and global warming — best to move along.

Second, Piketty puts conservatives in a rather awkward position. Conservative values, like “opportunity,” “family” and “tradition” — which are broadly supported by Americans — were once the backbone of the Republican Party. Today, that tradition has been jettisoned by the GOP in favor of becoming a subservient vessel for the richest of the rich. Some conservatives have argued that inequality isn’t a problem because government transfer programs — Social Security, Medicaid, Medicare — reduce inequality. This is certainly true, but these are the same transfer programs conservatives are so eager to cut! So if conservatives wish to make this argument, they must implicitly accept that transfer programs work to alleviate inequality, and therefore that cutting them will increase inequality.

Other conservatives, like Kevin Hassett at the American Enterprise Institute, have argued that the increase in income inequality has not led to increase in consumption inequality. That is, while incomes have diverged, because the wealthy save more, the poor and middle class can still afford to keep up in purchasing consumer goods. This isn’t true: Numerous studies find that consumption inequality has increased along with inequality. However, if the poor have been able to buy goods, they are only able to do so by increasing their debt-loads, which means that wealth inequality will increase concomitantly. (There was a day when conservatives would fear an increase in debt and a large propertyless class. Today, they cheer it on!) In both of the aforementioned conservative arguments, the right reveals the depths to which it will happily sink to gain the patronage of the wealthy.

Third, Piketty points us again to the most important facet of inequality — the inequality of capital. Capital — the ownership of assets that allows individuals to attain wealth and exploit labor — was what Marx worried about. As he wrote in “The Communist Manifesto” of the members of bourgeois society: “Those of its member who work, acquire nothing, and those who acquire anything, do not work.” Today, the debate over income inequality is framed often as the distinction between the salaries of mega-CEOs and minimum-wage workers. This inequality is certainly disturbing; a recent Demos report finds that the compensation of fast food CEOs was more than 1,200 times the earnings of the average fast food worker. But salary is only one part of compensation. Piketty reminds us that a far more potent driver of inequality is the passive accumulation of capital that is only exacerbated through inheritance (see chart below, from Piketty).

This distinction is important, because it reveals the true depth of Republican hypocrisy. While they talk of the value of hard work, they cut taxes on the various parasites whose only source of wealth is the labor of others. They wish to reduce income taxes to 25 percent and, more disturbingly, eliminate capital-gains taxes altogether. That means more wealth inequality, because the percentage of Americans who owns stocks is decreasing (and capital is even more unequally distributed than labor). When their policies are examined objectively, they help not even the 1 percent, but a much smaller portion of society — the 0.01 percent that make their money through capital accumulation and exploitation, rather than of honest labor.

* * *

Is Piketty’s book more likely to be purchased and sat on a coffee table than read? Certainly. The same can be said of “Das Kapital,” though no one would attempt to deny its immense political impact. Keynes’ “General Theory of Employment” — the ur-text of modern economic policy — also wasn’t widely read by the masses, but no book has had a more potent or prolonged influence on the world economic program. The idea of a dense, academic tome setting the public alight is not extraordinary, but rather quite ordinary. The list can certainly be expanded. It’s unlikely that public fully understood the “Origin of the Species,” the Pentagon Papers, “Silent Spring,” “The Kinsey Report,” “Democracy and Education” or “The Course of Positive Philosophy” at the time of their publications, but their impact on society, because of the movements they either fomented or supplemented, is undeniable.

“Capital in the 21st Century” is such a book. For decades, Americans have been aware of the fact that “growth” was no longer benefiting them and their children. We have noticed that the benefits of new technology and of our labor have been flowing to a very few, and that those same people then dictate policies to consolidate their wealth even further. Our voices are not heard, as both political parties, to differing extents, have become subservient to those with wealth.

If nothing else, “Capital” will finally bring questions of “who gets what” back to the center of economics. Economists will no longer be able to couch tax cuts for the rich behind a veil of jargon, disguising power relations as mere economic efficiencies. We forget, if we ever knew, that the earliest economists were philosophers and historians first — and that economics was always considered to be a question of politics.

The Founding Fathers feared that inequality and the conflict between capital and labor would undermine the nascent American government: John Adams, for example, wrote that “property monopolized or in the possession of a few is a curse to mankind.” And even Adam Smith — he of the “invisible hand” — worried of men who “monopolize economic power and undermine the government.” The solution proposed by America’s founders was widespread capital ownership. As Adams writes, “The only possible way then of preserving the balance of power on the side of equal liberty and public virtue, is to make the acquisition of land easy to every member of society.” Later, Abraham Lincoln said, “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.” Lincoln and the Founders would have been disturbed to learn that one family, the Waltons, now owns more wealth than the bottom 48 million families in America combined; and that wealth inequality is again back to the levels last seen in the days of “The Great Gatsby.” (See chart below, from Saez and Zucman.)



Piketty supplies us with the basis for a new narrative. In this narrative, the postwar period — in which rapid growth produced broad-based, equally shared growth — is unique, not an inevitable product of capitalism. Piketty believes this postwar lull in violent inequality to be an inevitable coalescence of population and war. I believe it was brought about by a powerful labor movement and an epochal crisis of capitalism, coupled with wartime solidarity. Either way, such equality will not come again without action (and it’s unlikely we could grow our way to equality). Money will not remove itself from politics. Power cedes nothing without demand.

The owners of this country, those who profit off of lung cancer, environmental degradation and political capture, are very worried that we learn their tricks. They did not create wealth, they stole it, and continue to accumulate it. As Marx noted, the default position of capitalist societies is ever more inequality and accumulation. Although he is far from a Marxist, Piketty has reaffirmed this truth. The only question that remains is the question Nikolai Chernyshevsky asked in 1863, “What is to be done?”

 

[richard_daily]

So income disparity is a crime? Which law are they breaking. State or Federal?

They're breaking the laws of basic economics... and they're ruining long-term sustainable economic growth... but I mean, if you don't care about the long-term prosperity of this nation, then hey.... carry on.

 

[richard_daily]

If you're cool with Marx's version on communism, that's fine. Just come out and say that.

Are you some kind of idiot? In what part of Marx or Engles writing do they advocate 100x higher rates of income for top echelons?

You're either really stupid, or just parroting talking points and failing to understand the basics of this discussion.

 

[LJ_Reloaded]

Why should he be? Von Mises was an Austrian-school economist; that's pure pseudoscience deserving zero respect. Even Marxism has a better claim to scientific status.

A better claim than the great superstitious belief system that is Capitalism? That's not saying much at all.

 

[Sean Renaud]

The people who are praising this drivel are all liberal academic economists. Let here real economic experts: the business community

Let's let the grunts lecture the Generals on how a war is run.
I guess that explains why so many Republicans don't want life time politicians running for their party. They prefer to put amatuers into high ranking positions.

Are you some kind of idiot? In what part of Marx or Engles writing do they advocate 100x higher rates of income for top echelons?

You're either really stupid, or just parroting talking points and failing to understand the basics of this discussion.

Not that he's not a retard but his point is that only Marxist, socialist, scum bags would look at income disparity as a problem.

A better claim than the great superstitious belief system that is Capitalism? That's not saying much at all.

Psst. You're American, you love capitalism with all your heart.

 

[RobDownSouth]

So income disparity is a crime? Which law are they breaking. State or Federal?

It's not a "crime", that's just you moving the goalposts.

Piketty simply shows how coddling the upper class ultimately weakens a country...and that is what has the mouthbreather right clutching their pearls.

The landowner/"maker" class has historically averaged a rate of return on capital of 5% a year since the early 1800s. Economic growth, which benefits a country as a whole, lagged at about 2% per year.

We could go a long way towards rectifying this inequality by simply taxing capital gains at regular income rates.

I look forward to your spittle-flecked outrage in reply.

 

[KingOrfeo]

Great quote: Abraham Lincoln said, “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”

Sounds straight from the Communist Manifesto - per a Sean Hannity assessment, I imagine. [Note: edited from typo-ed "Community Manifesto," more of a suburban pamphlet I imagine.]

In fact, Lincoln, while no Marxist, was friendly with Marxists and appointed several to high government and military offices. You can read the story in The S Word: A Short History of an American Tradition . . . Socialism, by John Nichols.

 

[KingOrfeo]

They're breaking the laws of basic economics...

No, I fear they are following the laws of basic economics; this disparity is the result such laws naturally/mechanically produce, absent some kind of drastic government remediation. Of course, another result is that disparity in economic power leads to corresponding disparity in political power, which makes such intervention politically unlikely, absent some kind of drastic populist pressure.

 

[KingOrfeo]

From The Nation:

The Power of Piketty’s ‘Capital’

A brilliant book has named the problem of our time. But will anything change?

Eric Alterman April 23, 2014 | This article appeared in the May 12, 2014 edition of The Nation.

If you were among those who followed the reports on French economist Thomas Piketty’s US book tour in support of his university-press-published, 696-page, Marxism-tinged treatise on inequality, Capital in the Twenty-First Century, and taxed your brain trying to recall a remotely recent antecedent for the ensuing excitement, well, relax—there isn’t any.

No less remarkable is the fact that one can, for once, believe the hype. Beautifully translated by Arthur Goldhammer, Piketty’s Capital is simultaneously intellectually rigorous, historically grounded, culturally nuanced and, in important respects, politically visionary. Even nitpicky economists who take issue with some of his interpretations of the mountains of data he and his colleagues assembled feel compelled to shower the book with praise beforehand—and frequently after as well. Paul Krugman credits Piketty with inspiring “a revolution in our understanding of long-term trends in inequality.”

Piketty’s central thesis presents a profound challenge to our political system and its response to the economic crisis of the past decade. As he puts it, an “apparently small gap between the return on capital and the rate of growth can in the long run have powerful and destabilizing effects on the structure and dynamics of social inequality.” Moreover, “there is absolutely no doubt that the increase of inequality in the United States contributed to the nation’s financial instability. The reason is simple: one consequence of increasing inequality was virtual stagnation of the purchasing power of the lower and middle classes in the United States, which inevitably made it more likely that modest households would take on debt, especially since unscrupulous banks and financial intermediaries, freed from regulation and eager to earn good yields on the enormous savings injected into the system by the well-to-do, offered credit on increasingly generous terms.”

While edifying intellectually, all this attention to inequality raises the question of what comes next—or, to borrow a phrase from another famous student of capital: What is to be done? Surprisingly for an academic economist, Piketty does not demur. On an entirely utopian plane, he imagines the effect of a progressive global tax on capital. “Such a tax would also have another virtue: it would expose wealth to democratic scrutiny, which is a necessary condition for effective regulation of the banking system and international capital flows.” On a minutely less unrealistic level, he argues for confiscatory tax rates on the wealthy of up to 80 percent. And on an ever-so-slightly more imaginable plane, he calls for boosting the minimum wage and improving the education and training opportunities of the poor and middle class, who are increasingly priced out of our faux-meritocracy, which is itself shaped by economic inequality.

But to be brutally honest, it’s hard to imagine any measurable impact from Piketty’s work on the problem it seeks to address—at least insofar as it relates to America today. “Inequality is not just the result of economic forces,” notes economist Joseph Stiglitz, “but political processes themselves are affected by the level and nature of inequality.” Stiglitz and others may treat this as cause for optimism. I do not. The chances that significant national action will be undertaken to improve the lives of the vast majority of our citizens have fallen to nearly zero, should such action be perceived to conflict with the interests of any subset of the super-rich, regardless of how small their number or how trivial its cost.

The ability of money to win what it wants is the defining characteristic of our politics—one exacerbated by the Supreme Court’s recent decision in McCutcheon, and Citizens United before that. A reflection of this power, and a not-so-silent partner in the ethical crimes it perpetrates, is the manner in which demonstrable bullshit is able to dominate our political discourse and thereby mask all of the above behind ideological assertion and meaningless cliché. In his discussion of Piketty, Krugman recalls Upton Sinclair’s famous observation that “it is difficult to get a man to understand something when his salary depends on his not understanding it.” Thanks to the simultaneous corporatization and conglomeratization of our media apparatus, that category now includes almost every credentialed political pundit in America. (On this topic, congratulations to ABC News on the hiring of both William Kristol and Laura Ingraham for its Sunday-morning show This Week With George Stephanopoulos.)

As with Piketty’s data, the proof is in the proverbial pudding. Researching 1,779 national policy outcomes over a period of twenty years, Martin Gilens and Benjamin Page note in a new study that “economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while mass-based interest groups and average citizens have little or no independent influence.”

This dynamic is evident in pretty much every policy area where the interests of even a relatively small number of really rich folk are remotely imperiled. Writing in The American Prospect, Jacob Hacker and Paul Pierson compare inequality to climate change, a problem “in which a solution must not only overcome powerful entrenched interests in individual countries but must be global in scope to be effective.”

Good luck with that. Just prior to Piketty’s arrival here, the United Nations’ Intergovernmental Panel on Climate Change released yet another report warning that only emergency action at this point can save us from the catastrophic consequences of our fossil fuel addiction. The cost to economic growth of taking such action would be next to nothing (about 0.06 percent per year). But so long as the Koch brothers—whose estimated net worth now exceeds $100 billion—and their puppet politicians and pundits continue to profit from the poisoning of our planet, you can bet nothing will be done.

Behold, ladies and gentlemen, the power of capital in the twenty-first century.

 

[Sean Renaud]

No, I fear they are following the laws of basic economics; this disparity is the result such laws naturally/mechanically produce, absent some kind of drastic government remediation. Of course, another result is that disparity in economic power leads to corresponding disparity in political power, which makes such intervention politically unlikely, absent some kind of drastic populist pressure.

I don't think so. I think all this modern tech kinda just lets everything get twisted up increasingly easily.

 

[richard_daily]

Not that he's not a retard but his point is that only Marxist, socialist, scum bags would look at income disparity as a problem.

The truth of the matter is that anyone who has any patriotism would look at income disparity as a problem.

Those who lack any patriotic outlook on economics don't care that countries are outsourcing jobs to China and that the hourly wage of the american worker has been falling since 1975.

 

[KingOrfeo]

I don't think so. I think all this modern tech kinda just lets everything get twisted up increasingly easily.

If there are such things as "basic laws of economics," they should apply under all technological conditions except WRT epochal shifts in basic conditions, i.e., economic conditions before and after the Industrial Revolution might have some differences in "basic laws." And, maybe, therefore, before and after the beginning of the Information Age. But, high-speed trading or things like that are not of that order.

 

[Sean Renaud]

If there are such things as "basic laws of economics," they should apply under all technological conditions except WRT epochal shifts in basic conditions, i.e., economic conditions before and after the Industrial Revolution might have some differences in "basic laws." And, maybe, therefore, before and after the beginning of the Information Age. But, high-speed trading or things like that are not of that order.

I disagree. There appear to be for a lack of better terminology "natural laws of economics."

Not that it's particularly important the junction we're at it society.

 

[KingOrfeo]

I disagree. There appear to be for a lack of better terminology "natural laws of economics."

Not that it's particularly important the junction we're at it society.

Supply and demand still holds, doesn't it?

 

[Sean Renaud]

Supply and demand still holds, doesn't it?

Yes, Supply and Demand still hold. I think there are a number of rules that aren't properly quantified however.

 

[KingOrfeo]

Yes, Supply and Demand still hold. I think there are a number of rules that aren't properly quantified however.

Interesting. Such as?

 

[Sean Renaud]

Interesting. Such as?

Maximum Consumption being one.

If we accept that Supply and Demand is basically a law, it's not something anybody invented or set in place, it's just the natural state of the universe. To use the simplest example once upon a time our ancestors went hunting, even if the Alpha wanted to eat all of the mammoth by himself he couldn't. It would go bad faster than he could eat it. He wasn't really sharing out of the goodness of his heart.

It's the basics of what Republicans would refer to as "Trickle Down Economics" And for the most of human history there were similar obstacles in place keeping the guy on top from consuming everything. It was limited by how long goods would last, how much skill was needed to produce them, how far and how fast they could be transported all sorts of things. Right down to how until cell phones became standard important men had to pay people to do nothing but answer their phone (and some still do but it's increasingly unnecessary and is more of a status symbol than anything else.)

I'm in agreement that in the post industrial revolution world something changed. But I think the thing that changed was maximum amount one person actually consume.

Hell without phones and convenient planes, trains and automobiles controlling more than a local market was difficult. Consolidation of wealth on this level was a huge pain before.

I'm sure there is a more elegant way of putting it however.

 

[4est_4est_Gump]

Great quote: Abraham Lincoln said, “Labor is prior to, and independent of, capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration.”

Sounds straight from the Communist Manifesto - per a Sean Hannity assessment, I imagine. [Note: edited from typo-ed "Community Manifesto," more of a suburban pamphlet I imagine.]

Capital is the fruit of self-interest, cooperation and the division of labor.

(Mises)

 

[4est_4est_Gump]

Maximum Consumption being one.

If we accept that Supply and Demand is basically a law, it's not something anybody invented or set in place, it's just the natural state of the universe. To use the simplest example once upon a time our ancestors went hunting, even if the Alpha wanted to eat all of the mammoth by himself he couldn't. It would go bad faster than he could eat it. He wasn't really sharing out of the goodness of his heart.

It's the basics of what Republicans would refer to as "Trickle Down Economics" And for the most of human history there were similar obstacles in place keeping the guy on top from consuming everything. It was limited by how long goods would last, how much skill was needed to produce them, how far and how fast they could be transported all sorts of things. Right down to how until cell phones became standard important men had to pay people to do nothing but answer their phone (and some still do but it's increasingly unnecessary and is more of a status symbol than anything else.)

I'm in agreement that in the post industrial revolution world something changed. But I think the thing that changed was maximum amount one person actually consume.

Hell without phones and convenient planes, trains and automobiles controlling more than a local market was difficult. Consolidation of wealth on this level was a huge pain before.

I'm sure there is a more elegant way of putting it however.

*chuckle*

Social Evolutionary Theory again..