April 22, 2014

“How to respond to Thomas Piketty’s inequality alarmism”

Piketty, for those you who don’t know, is leftist/socialist French economist who has put together a modern-day version of Marxist market principles, which of course are a critique of capitalism and the garden variety Fabian concern over “income inequality” — which rejects the whole “rising tide raises all boats” idea championed by such proto-TEA Party extremists as, eg., John F Kennedy.

And, according to an interview he gave recently, he’s had the ear of the White House, Mr Lew, and the Democrat Party for quite some time now. A socialist. Proposing socialist principles. Who rejects capitalism. And is evidently the economist with the most influence with Democrats.

Which means the way to respond to Mr Piketty’s alarmism is to ask him if the relative income inequality in, say, Cuba and North Korea and parts of Africa are making those countries Utopian paradises? And then bitch slap him and walk away.

Jim Pethokoukis, though, takes another, more urbane tack, one that grants Piketty more respect as an intellectual than I believe is deserved. Which I might not be saying were this the late 19th century, and we hadn’t yet witnessed the historical reality of anti-capitalist, anti-free market economic systems, and the inevitable totalitarianism and police state apparatuses that come along with them.

Not to mention the gulags, or gas chambers, or killing fields, or mass graves.

Writes Pethokoukis:

[…] Piketty [is a first-rate scholar whose magnum opus is well worth reading, whatever your ideological inclination. His thesis is straightforward. At its center are observations and forecasts about the return on capital, economic growth, and the relationship between the two. Some economists, such as Paul Krugman and Martin Wolf, think Piketty’s probably got the story right. Others, including AEI’s Kevin Hassett, Tyler Cowen, and Joshua Hendrickson, take the other side of the trade.

Yet even if Piketty is wrong, there is reason to believe technology and globalization might sharply increase immobility, as well as boost income and wealth inequality–and  lead to long-term wage stagnation for the vast majority of workers. The good news here is that many of the most realistic responses — even Piketty thinks his own end-game policy agenda is utopian — are intrinsically good ones. Since slow economic growth worsens inequality, we should want to pursue policies that might boost birthrates (tax relief for parents) and innovation (remove regulatory barriers to entry).

Indeed, Piketty has said as much. If capital ownership is becoming too concentrated, then we should try to broaden it (universal savings accounts) and turn more workers into owners. Cowen highlights “deregulating urban development and loosening zoning laws, which would encourage more housing construction and make it easier and cheaper to live in cities such as San Francisco and, yes, Paris.” And, of course, both primary and secondary education need a strong dose of disruptive innovation to meet the changing needs of students and workers.

If policymakers start giving such ideas greater thought, then Piketty’s book, right or wrong, will have performed an immensely valuable service.

From where I sit, this is precise NOT how to respond, generally-speaking, to Piketty’s inequality alarmism, if only because we know that it isn’t “inequality” that drives leftist dogma, but rather a rejection of true diversity, economic liberty,  individual autonomy, and a free market.  They want concentrated power, an ability to control and manipulate the masses, and to essentially run the world as their own social Petri dish.

So rather than dignify Piketty’s boring retread of socialist economics, what we need do is simply point to the numerous examples of countries that have followed that lead — who have sought radical egalitarianism, which leads to equality of misery and is a necessary rejection of liberty, which by its very nature ensures certain inequalities of outcome (because it is the product of individual choice and individual industry, not to mention an entire matrix of additional personal decisions) — and not that they have either failed, are failing, or are becoming police states, with more and more centralized governmental power.

Like, for instance, our own country.

Now, I understand and agree with Jim’s more general point — that the questions Piketty raises allow for conservative and free-market answers to find voice in the conversation — but the truth is, that presumes that the left is interested in good faith economic arguments. It’s not. It’s interested in entrenched centralized power and control and promoting a permanent ruling class.  It is liberal fascism’s end game, because in order to run paradise, some pigs are going to of necessity have to be more equal than others.

Concentration of capital, as Mark Levin pointed out last evening, is occurring, but more and more that concentration is taking place in the federal government.  Taking money from the private sector and creating disincentives to move capital around.   Obamacare is a further deterrent, because venturing out on one’s own to start a business could lead to a loss of health care, etc.

And it was intended to do so:  socialist economic policy is not a legitimate engagement in intellectual debate; instead, it is an attempt to re-distribute wealth, gain enormous power of citizens turned subjects, and entrench the progressive trajectory that has so long been chipping away at our constitutional system and the protections of our natural rights t was devised to secure.

So, sure, if you want to join the debating society, by all means, expound upon the flaws in Piketty’s thinking.  Me, I’d rather just tell him to go fix France first before worrying about us.

(h/t to geoff B, who brought Piketty’s influence to my attention weeks ago; I just never go around to writing about it)

Posted by Jeff G. @ 12:24pm
46 comments | Trackback

Comments (46)

  1. http://thefederalist.com/2014/03/26/what-liberals-condemn-as-cultural-appropriation-is-actually-called-learning/

    Remember when the left was only full retard instead of ultra-mecha-space-king-retard-Kai?

    Good times. Good times.

  2. I’ve never heard of Piketty. I suppose it’s just possible that, like Christopher Lasch, he has his descriptive uses. So long, that is, as you can weed out his formulaic prescriptive Marxism.

    On the other hand, Lasch was a historian doing cultural criticism. A marxist economist is something else.

  3. it is an attempt to re-distribute wealth,

    But not among the citizen-subjects — amongst cronies.

    Which puts us on the road to becoming Argentina or worse, Venezuela.

  4. Zimbabwe

  5. I think you’re drawing finer shades of distinction than are really warranted, di. I mean, I’m pretty sure that the party leaders in Moscow all had lovely dachas on the Black Sea. I’m equally certain that Mao’s buddies didn’t starve to death during any Great Leaps. And last I checked, the Kims were doing pretty well for themselves.

    Every socialist Utopia quickly turns into exactly the sort of nightmare that these “income inequality” zealots rail against. The difference is that their haves and have-nots are separated based on ruthlessness and will to power, and on blind subservience to the most bloodthirsty “leaders.”

    My shorthand for arguing with the socialists is that while it may be true that my way leads to giant gulfs between rich and poor, their way leads to exactly the same end. Only difference is, my guys get rich and powerful by offering useful goods and services, while theirs get powerful by abusing the power of the State to take shit away from people they don’t like and give it those they do.

    Well, that’s not the only difference. In my version, people have hundreds of places to buy food and clothing and consumer goods. In their version, people have a handful of places where they can stand in line for hours and hope against hope that there will be toilet paper today.

    Bumper sticker version is: “Socialism = Ticketmaster”

  6. No one knows less about economics than a marxist. Let alone markets. This missive can be dismissed out of hand on those facts alone.

  7. I first encountered the name Piketty in connection with various brou-ha-ha running back in 2006 (here’s one). He and that fellow E. Saez made claims that raising the minimum wage didn’t have negative effects on employment, if I recall one of their assertions correctly. Other economists took them up (and made rather quick work of disproving their study).

  8. Well done.

    Your joke there, Kennedy being tea partier for the rising tide all boats thing connected with a bit I heard on local t.v. just now.

    The female curator delicately explaining the story of an early era businessman doing some factory work involving women long before 1930’s said, “he had very progressive business practices.” Smugly. Suggesting he was modern-minded, good-minded, good-thinking and politically progressive for his day, progressivism before it was progressivism. He undoubtedly was Republican and his opposite in business practices Democrat, the exact opposite her irrepressible clucking suggests *click* I cannot even make it through a biography anymore without becoming disgusted with LIES the LIES all LIES!

  9. To profess Marxism is to profess mass murder. Bill Ayers is Margaret Sanger is Thomas Piketty is Heinrich Himmler.

    Fuck civility. Godwin can kiss my ass.

  10. I been ignoring this slutty French whore guy for a good two weeks it seems like

  11. Yes, Happy, but our progressive betters seem to find him compelling.
    And right now they think they’re in charge.

  12. but the whole ioncome inequality things is just what food stamp needs everyone to talk about cause

    a.) bitch can’t create no jobs

    b.) bitch can’t instigate any meaningful economic growth

    c.) bitch can’t even pretend he’s got a meaningful economic policy – bitch has had federal reserve training wheels on from day one – even in 2014 bitch’s entire economic plan pretty much involves grandma printypants at the fed printing scads and boatloads of shitty debased american dollars

  13. *income* inequality I mean

  14. Well yeah, of course bitch can’t create no jobs or meaningful economic growth. But then the thing is, bitch won’t consider allowing other people to create jobs on account of that would mean surrendering power — which, not gonna happen, power (well, and lies) being the only coin of the realm.

  15. Someone should ask Monsieur Piketty about the non-market created differences to the dollar paid/ dollar worth value of labor and what entity creates this differential.

    Cost of labor: Looking at my books right now I see a reasonably average worker who costs $12.50 an hour to pay who takes home $8.30 an hour in net compensation. I don’t pocket that ~ 33% genocide against labor. Neither does labor. A third party entirely does.

    Return on capital (partial argument): Likewise, I don’t control interest rates. Neither does labor. Neither does the market as a whole anymore.

    His argument brackets the entirety of market distortions caused by these mysterious outside parties.

  16. food stamp consumes alot jet fuel so there’s that

  17. *Note: That $12.50 an hour is a strict book number that doesn’t count mandated insurance requirements, workplace rules, or all the varied compliance costs that probably add somewhere around another $2 to $3 an hour that neither capital nor labor place into their pockets at the end of the day.

  18. a bh post is a nice thing to see

  19. His argument brackets the entirety of market distortions caused by these mysterious outside parties.

    Yay! See that geoffb? I think’s I may have been onto something after all, though I note that bh can crystalize the meat of it way better than I can do.

  20. The standard argument (with merit) for the relatively high wages enjoyed by American workers has always been the “lots to do, not many people” argument. Meaning: if you just picked up a few thousand acres of ranch land in the west or were opening up a mine you needed workers to work that property. Peasants who were starved in Europe because property was fixed and unlikely to be worked in new ways could come here where they were valued as hands rather than scorned as mouths.

    It’s a strong theory with a great deal of evidence behind it. As a side note, this high labor cost had a nice secondary effect of driving technological invention. When you’re paying men rather than managing serfs then tools that make these men even more productive are worth investing in.

    It’s quite possible though that we’re missing another complementary explanation. While Europe had the time to build up incredible guild and social structures to create cost friction at every level of each transaction, America was a place where a man could step off a train without position or letter of endorsement and accept an offer to do some agreed to labor for some agreed to payment in cash.

    I think this earlier level of frictionless capital/labor marketplace explains quite a lot now that we’ve seen the pendulum swing back towards the more European-style medieval early mercantilism where peasants still aren’t entirely free of their lords.

  21. A man who puts my own thinking so much better than I do so…

    Here’s an example – one that touches on what is perhaps the single most substantive difference between Piketty’s understanding of reality and my understanding of reality.

    On pages 59-61 (page 60 is devoted entirely to graphs), Piketty writes

    In other words, the lead that Europe and America achieved during the Industrial Revolution allowed these two regions to claim a share of global output that was two to three times greater than their share of the world’s population simply because their output per capita was two to three times greater than the global average.

    At the risk of me being accused of stealing an effective pedagogical technique from David Henderson, I ask: Do you see what Piketty does here? Do you see in this passage Piketty’s questionable implicit assumption?

    Piketty’s writes, first, that Europeans and Americans of 200-odd years ago ‘claimed’ a share of global output. Claimed? The impression conveyed, if only subtly, is that global output is somehow out there and then Europeans and Americans managed by some means to lay their hands on a disproportionately large share of that existing output, leaving people in other parts of the world with a disproportionately smaller share of this output.

    Why not write instead – as I am certain is more accurate – “… the lead that Europe and America achieved during the Industrial Revolution allowed these two regions to produce a share of global output that was two to three times greater than the the population-adjusted amount of output produced by people in the rest of the world” ?

    Europeans and Americans back then didn’t become wealthier than people elsewhere by seizing some disproportionately large chunk of a pot’o’prosperity that existed independently of these Europeans’ and Americans’ own productive and innovative efforts. Europeans and Americans created and produced the additional ‘disproportionate’ wealth that they then enjoyed.

    […]

    If you think that I’m nit-picking, read again the passage from Piketty quoted above. Isn’t it strange that he describes Europeans’ and Americans’ share of global output as being two to three times greater than their share of the world’s population “simply because their output per capita was two to three times greater than the global average.” ? Simply because their output per capita was two to three times greater than the global average? This wording suggests that Piketty thinks that there’s not much – or no necessary – connection between the amount of output that an entity produces and the amount of output that that entity then has available for itself to consume or invest.

  22. >we’ve seen the pendulum swing back towards the more European-style medieval early mercantilism where peasants still aren’t entirely free of their lords. <

    for example – if you are a poor yout today who wanted to start a painting biz, you'd be forced to do lead paint remediation to any structure built before 1978 after scraping it.

  23. if you are a poor yout today who wanted to start a painting biz, you’d be forced to do lead paint remediation to any structure built before 1978 after scraping it.

    Exactly so. Who demands that obscenely expensive remediation (whether it’s lead paint, asbestos or any number of OSHA rules wherein each has a minuscule public value while carrying a large private cost)?

    It’s not labor. It’s not capital.

    It’s this mysterious third party.

  24. In other words, the lead that Europe and America achieved during the Industrial Revolution allowed these two regions to claim a share of global output that was two to three times greater than their share of the world’s population simply because their output per capita was two to three times greater than the global average.

    Replace “claim” with “earn” and that’s a perfectly fine statement. I’ll let the “simply” stand because it is simple. It’s a basic truism.

  25. >It’s this mysterious third party<

    i'd say that there is a fourth party involved. crony rent seekers. oh and i did sous vide @54 c leg of lamb for easter with a grill sear. very good.

  26. I’m assuming that Monsieur Piketty “claims” a more expensive house and car than the average person’s “share” “simply” because he published a book that sold well.

    It’s a fairly commonplace arrangement.

  27. i’d say that there is a fourth party involved. crony rent seekers.

    That’s a good point. I combine the two rhetorically too often.

  28. i think “to produce” works better. i think “share” is problematic in that it plays into a zero sum mindset.

  29. Monsieur Piketty – his problem is that his “ideas” are not useful for everyday folks. the ruining class love this stuff.

  30. The view from “France 24″

    And a few more pages on after that quote via Google books.

  31. By focusing on “equality” instead of justice then the progressives have to have a unit of measurement of what is unequal and to judge when “equality” is achieved.

    Economic conditions, of an individual or a group can be measured and the measurement expressed as numbers. This means graphs, equations and other symbols of being “scientific” can be used to make it seem as if there can be no debate on the subject because it is “proven.” This gloss of scientific rigor is important to progressives, the Lysenkoist-Levelers.

    That what is being measured, and so, what is being equalized, may not be important, may not even actually be as they are portrayed, matters not. The whole is just a means to the end of power. An end to be hidden in the swirling snarl of numbers, graphs, equations and the drone of their words.

  32. Hey, leigh!

    I can’t disagree with your description of quantification becoming scientism in the name of progress (meant pejoratively for those last two), Geoff.

    It’s a strange thing. To the degree that econ is useful it’s quantifiable and it’s humble. In the good old days the very real limits on quantification (What number value would the green grocer assign to the trustworthiness of the salesmen as he made a yearly contract?) led to this humility. Now this is all papered over with our aggregates.

    “It’ll all come out in the wash” somehow won over “garbage in, garbage out”. Feh.

  33. we waste our time answering the long discredited arguments of the parasitic class from which piketty et al live. better a good: bin there done dat

  34. income inequality is also useful for glossing over the

    what’s that word

    um

    it’s

    oh crap

    oh – right

    regressive

    the regressive nature of what happens when america’s whore president engineers higher energy prices

    poor people have to use a huge part of their income just to pay for electricity and gas

    bless their hearts

    and food is super-expensive now too, and going higher cause failifornia flushed all the water into the sea for so the fishes and the salamanders could… I’m not sure exactly

    and now the middle class is paying a metric shitload more for health insurance thanks to the nasty little bitch in the american white house

    Plus all the fucking taxes.

    So yeah the slutty french whore is just the ticket right now. If only cause Mark Zandi’s whored himself into a useless fucked-out stupor.

  35. bh!

    Has it been a couple of months already? I’d direct you to patrol Jeff’s Twitter war but the discretion/valor index seems awfully low and it’s darn near impossible to identify down-range in the twittersphere.

    “An end to be hidden in the swirling snarl of numbers, graphs, equations and the drone of their words.”

    Geoffb,

    Or as Mark Twain was fond of saying: “There are three kinds of lies: lies, damned lies and statistics.”

  36. A marxist economist is something else.

    Delusional is what it is.

  37. there’s actually more than three kinds of lies I think

  38. an ivy league “education”?

  39. my favorite one is “free puppies”

  40. I note above that when the progressive’s proclaim that they are for something, in this case “equality” they choose some form which can be quantified. Income in this case. Because it can be quantified then they can propose measures to change the quantities in the direction they say that they seek.

    So too for another totem, “diversity.” The forms chosen, “race,” “gender,” etc. are ones to which numbers can be assigned and measures taken to adjust the numbers to whatever goal is proclaimed as desirable. It is a “diversity” which can fit alongside/inside the also desired “equality.”

    A diversity that is only skin deep and a Procrustean equality. The best that social science and social justice can offer up. The “social” that isn’t.

Leave a Reply