back to article Piketty thinks the 1% should cough up 80%. Discuss

Piketty's Capital in the 21st Century has the economics world agog: be the first among your friends to really understand it. Thomas Piketty's book, Capital in the 21st Century, has managed to top the Amazon bestseller lists as well as getting economists snarling at each other. It's the combination of these feats that is so …

COMMENTS

This topic is closed for new posts.

Page:

FAIL

Speaking as an American

(who, I must admit, has only started reading Piketty's book and has only a generalized knowledge of his argument), I can say that Mr. Worstall's take is completely beside the point. On this side of the pond, income for the masses has been stagnant since about 1974, while prices have continued to rise. Both income and wealth have risen for the top 10% and more so for the top 1%, to the extent that income for some CEOs has been clocked, in at least one instance, at 750x the income of the lowest paid worker in the same company (more commonly being a mere 250—300x). The welfare state here is not nearly so generous here as in the UK or Sweden (or France, for that matter). Medical bills are one the most common causes of bankruptcy. The current attempt to remedy this (which I call the Insurance Industry Protection Act) was a Republican idea now repudiated by said Republicans, because it was passed under a Democratic President. (Admittedly, it's a hot mess that would not have occurred had Mr. Obama lived up to his promise of a 'public option,' but that's an argument for another time.) While coverage is somewhat improved, we are now mandated to pay for it (which the Right and Mr. Worstall no doubt term a tax, and a largely regressive one at that). Of the 45 million uninsured, there are now only some 28 million... But enough of insurance and healthcare.

Even those working today can find it hard to make ends meet. WalMart workers are infamously often on EBT (née Foodstamps) and Medicaid. True, the poor are nowhere near as poor as the poor of past centuries, and that's good, but it's not really the question. (When I lived in Holland in the 70's, they said under the Dutch system you can't soar as high, but you can't fall as far. At this point in the US, you can soar with eagles but you can still be driven into the ground.)

There are two things, to me, that are especially germane: gross societal inequality, where 90% of the assets are in the hands of 10% of the people is a leading cause of economic catastrophe, as in the Great Depression. The other is societal and economic mobility, which except for a few, has all but ceased. This means that top percentiles stay rich, and in a land where by law money equals speech, they take control of the levers of power and warp the nation to their personal ends, which becomes a kind of economic feedback loop. One can see a future where 'wage slave' is not hyperbole.

6
1
Anonymous Coward

Re: Speaking as an American

> One can see a future where 'wage slave' is not hyperbole.

For many, that is an economic reality now.

Debt is so high, that we now have the phrase "one pay cheque away from bankruptcy".

Making waves at work or considering changing jobs is really not an option for many people lest they fall on dire times in the space of a single month.

1
1

Re: Speaking as an American

On this side of the pond, income for the masses has been stagnant since about 1974, while prices have continued to rise.

In 1987 when I first entered the real workforce I earned about $20K. Right now I'm north of $55K. My roomie, who works for the government started a bit above me and in now pulling down north of $80K. I use her as a rough approximation because her job is an actual engineering job, not a service one like mine. That looks pretty good to me. If you can't get your starting data correct your thesis isn't worth evaluating.

2
0

This article is typical of those who try to draw attention away from the facts; the rich are getting richer and the poor poorer both on an income and wealth basis.

Well, you're half right. The rich are getting richer, but so are the poor.

Even those on minimum wage have daily access to fresh fruit and vegetables. Only the very richest had access to that 100 years ago.

Even those on minimum wage have a centrally heated home with indoor plumbing. Only the very richest had access to that 60 years ago.

Even those on minimum wage have access to home computers. Only the very richest had access to that 30 years ago.

Even those on minimum wage have access to low cost foreign holiday flights. Nobody had access to that 20 years ago.

The poor have benefitted from advances in transportation, healthcare, diet, the internet.... the list is all but endless. The uber rich of 200 years ago would outright envy the lifestyles of the poor in Britain today.

8
1
Anonymous Coward

dietary habits of the 1900's 1%-ers

> Even those on minimum wage have daily access to fresh fruit and vegetables. Only the very richest had access to that 100 years ago.

A person earning minimum wage today lives and eats today, not 100 years ago.

> Only the very richest had access to that 100 years ago.

Really?

Here is a photograph if Chinatown, New York City - Mulberry Street, dated early 1900's, and showing an open market where fresh fruit and vegetables are being sold and bought:

http://www.nychinatown.org/history/photos/mulb1900.html

I take it that the people shown in this photo buying fresh fruit and vegetables were the very richest New York City had to offer at the time.

0
3
FAIL

Re: dietary habits of the 1900's 1%-ers

I take it that the people shown in this photo buying fresh fruit and vegetables were the very richest New York City had to offer at the time.

You've managed to go wrong three times in the same post.

Firstly you erroneously assume that the people buying the fresh fruit and veg do so every day rather than as an occasional treat.

Secondly, you've posted a photo of New York, when we're clearly duiscussing the UK. Got one for London? No, neither do I.

Thridly, the people in your photo are self evidently not "the poor".

3
0
Anonymous Coward

Re: dietary habits of the 1900's 1%-ers

> Thridly, the people in your photo are self evidently not "the poor".

Ah, yes, you were talking about "someplace else, where there are no photographs disproving your bullshit".

Facts are stubborn things.

Chinatown, New York City, has never been a rich enclave. It has always been a working-class neighborhood. It was so at the turn of the 20th Century, it is so now, and it's been so in-between.

At the turn of the 20th Century, working-class meant poor. As working-class you did not own a home or an apartment, your living conditions were most likely terrible, and you barely made enough money to make ends meet between paydays.

The problem with you 1%-er sycophants and wannabes is that you can't deal with facts.

0
1
Gold badge

I've not read Mr Piketty's book. I do rather like his name though. Ignoring the whiff of scandal from racy French politics, Thomas Piketty et Aurelie Filippetti. Piketty Filippetti, Filippetti, Piketty...

Anyway the question I wanted to ask of those who have, is how much has our french friend accounted for emerging markets in his global inequality? For example how many Russian and Chinese billionaires are there, who've got their cash out of the weird and unsustainable way the countries are run. There have been a few billionaire dictators over the years, shoving all the cash into Swiss banks and hideously kitsch palaces (I'm looking at you Saddam Hussein, Yanukovych and Ghadaffi).

But have we ever had the emergence of such a huge class of klepto-billionaires before? Everyone knows about the Russian lot, and to a lesser extent in Ukraine, Azerbaijan etc. But some of the figures for what the top echelons of the Chinese communist party are stealing (not to mention the rumours about Putin) - are truly mind-boggling! Also the wealth built up by a very small group of people in a few oil-rich countries (often with tiny populations) is a relatively recent thing. That together is from multiple hundreds of billions to trillions of dollars of moolah, suddenly in a very few hands - but is also quite unusual. And is enough to have major material effects on any analysis of global wealth inequality.

It's not capitalism that allows single individuals to get rich in these particular ways - that requires government.

4
0

Re: who've got their cash out of the weird and unsustainable way

Well, if you believe the Progs, they are little different than the Robber Barons of the Gilded Age.

In terms of absolute numbers, those are probably going up. In terms of per capita, I'm not so sure. Certainly as you trace back through history the kleptocrats and mass murders made similarly large (possibly larger on a relative basis) amounts of money.

None of which invalidates your concluding sentence. Rather I would say it enforces it. I think we made decent progress these last 250 years. It would be a pity to throw away not only them but the 400 which preceded them on the ludicrous theories of a Marxists from France.

3
0

Not sure I agree

Your argument about including these things is a fallacy. For example we have not access to pensions until we can recieve them and only if we use them to subsist. Therefore, since we cannot sell, or transfer them they have not monetary value and cannot be wealth, any more than out existance has value. Furthermore, if what you are arguing is that these should not be taken into account for the wealthy either, and they are not unless they can be converted to monetary gain (such as cashing in a pension).

Overall this is a fallacy, this is similar to believing that the child of a millionaire is wealthy, they are not until they have control of something to the extent that it can be turned into monetary gain. Furthermore wealth is not projected into the future, it in a snapshot; so pensions which are only usable as pensions(can't be cashed) are not wealth since they are not presently held.

1
5
Gold badge

Re: Not sure I agree

The argument is totally valid. Because the argument here isn't "there's no problem of wealth inequality". At least he's not making that in this article.

The point is that we're already dealing with the problem of wealth inequality with the following measures: NHS, education, benefits, pensions. Thefore you can't write a big old book talking about how awful wealth inequality is, and call for more measures to solve it, if you ignore the measures that have already been enacted.

Basically you can't take some subset of data in isolation and draw conclusions about how society should be run from it.

5
0

Re: Not sure I agree

For example we have not access to pensions until we can recieve them and only if we use them to subsist.

Just last month I used my 401(k) retirement account to take out a loan against the principal to pay off around $20K of high interest credit card debt. The loan will be less than half what I was paying and I'll be paying half of it to myself. That sounds like wealth to me. It certainly is helping my financial condition. By the end of the year I'll have cleared the last of my high interest cards and will be saving for the down payment on my next car.

Furthermore, if I die in a train crash on my way home from work, that retirement account would be divided amongst my heirs exactly as would a bank account.

Not having control over something doesn't exclude it from being wealth. For example, if I were a venture capitalist putting money into a start up, one of the likely clauses in the investment is that I wouldn't be able to sell my shares for 5, 10, or maybe even 15 years. Even then, if I am a significant stockholder, there might be rules that I cannot sell a significant portion of my shares without the approval of the Officers of the corporation and the Board of Directors. That doesn't make it any less wealth than if I had publicly traded shares. But I certainly wouldn't have control over them in the sense you are demanding for pensions.

Excluding these forms of wealth for the so called poor only for the purpose of making them look poorer than they are in unethical. In fact it reveals the truly authoritarian intent of the Progs who engage in it.

1
0

Re: Not sure I agree

Congratulations - you have just undermined the very point that the author is trying to make - that State Pensions (Social Security in USAian) should be treated as wealth.

Your example of using your own private 401K as collateral against a loan disproves Worstalls argument - try taking a loan out against your future Social Security income, and see how it works out. You wouldn't be able to do it on the same terms that you can with your 401K, so even if (for example) your 401k ended up providing exactly the same income as you will eventually get from Social Security, it would be wrong to count your Social Security as part of your current "wealth", though the author says that it should be.

0
0
Silver badge

I'm fine with the wealthy paying a bit more (in the U.S.) than they do now...

Personally, I think that the taxman taking about 40% or 50% of someone's marginal top income is about the limit I am comfortable with. Beyond that, it starts getting expropriative.

In the U.S. though, there are complications because of state-level taxation. In some states (New York, New Jersey, California being good examples) the state taxes are very high. In others like Texas and many mountain or southern states, they are lower. But wherever you live the state take still adds at least 8%-9% on top of the federal take if you are in higher income brackets. I'm assuming that local taxes are roughly the same between the U.S. and UK, but that may not be the case either.

One thing is certain, the U.S. income tax (and state income tax) codes need to be dramatically simplified. However, there are so many goodies in them for various interests that these interests squawk loudly when their exemptions are removed.

Plus I am very concerned that our spending on federal entitlements and state and local pensions is going to be so expensive that even bumping up "rich people's" taxes to 50% of their marginal income is not going to pay the bill. So I expect that over the next 10-25 years we are going to see painful cuts in the U.S. welfare state to keep the programs solvent in the future

2
1

Re: I'm fine with the wealthy paying a bit more (in the U.S.) than they do now...

Excluding your title and first paragraph the rest of your points are fine.

The problem is your title and first paragraph. What's worse is, even though you won't see it, they are the reasons for the rest of your observations.

1
0
Anonymous Coward

Re: I'm fine with the wealthy paying a bit more (in the U.S.) than they do now...

There are no local income taxes in the UK. And the local property taxes in the UK come nowhere near the level that they do in the US.

Property taxes of $400 PER MONTH on middle class homes are not unusual in the US (at least in the North Eastern states that I'm familiar with). 80% of that goes to the local school district, whereas in the UK, most education funding comes from the national coffers.

1
0
Anonymous Coward

Re: I'm fine with the wealthy paying a bit more (in the U.S.) than they do now...

"Property taxes of $400 PER MONTH on middle class homes are not unusual in the US"

The equivalent is called "Council Tax" in the UK.

0
0

data source

Tim, can you point me towards your preferred data sources? I've been using the OECD's Gini (at disposable income, post taxes and transfers) in combination with their data on relative poverty and median incomes from here: http://stats.oecd.org/index.aspx?queryid=46189#

0
0

Re: data source

OECD's probably the right place. Certainly it is for income inequality. They do much better with the US for example than the World Bank (or, amusingly, the CIA Handbook) does.

On wealth inequality one of our problems in this entire debate is that there's no agreed to be correct data set. That's half of what the argument over Piketty is all about.

1
0

Interesting Analysis Applied to the Wrong Subject

I think Piketty's book was meant to address a capitalistic economy like we have in the US rather than the more socialistic economy of Europe. We have none of the benefits that Tim, rightfully in my opinion, considers important in measuring wealth. Child care, education, health care all have enormous value, but we get none of them. Tim's conclusions are reasonable, just not everywhere.

0
2
Silver badge
WTF?

Re: sampo Re: Interesting Analysis Applied to the Wrong Subject

"....Child care, education, health care all have enormous value, but we get none of them...." So, just for starters, all the State schools and colleges are imaginary then? IIRC, public and free elementary schools have been available in all States since 1870. One little-known fact is that, during the 1800s, the Yanks had higher levels of literacy than the established States of Old Europe, which kinda debunks the oft-repeated myth of 'dumb Americans'.

As for healthcare, isn't 60+% publically-funded? Childcare was covered in the Child Care and Development Block Grant (CCDBG) and the At-Risk Child Care Program, enacted as part of the Omnibus Budget Reconciliation Act of 1990 (Public Law 101-508). These programs were preceded by enactment of a major welfare reform initiative, the Family Support Act of 1988 (Public Law 100-485). Are you sure you're posting from the States?

1
2

Re: sampo Interesting Analysis Applied to the Wrong Subject

My apologies being unclear, I was referring to higher education which once had stronger government support here but no longer does. I was also referring to healthcare for the majority of the population outside of at-risk children and persons eligible for Medicare. My point is that we don't have the level of public benefits that offset income inequality to the degree that is found in Europe and the UK. And therefore I don't find that the point of this article makes sense when you consider the US.

0
1
Silver badge

Re: sampo Interesting Analysis Applied to the Wrong Subject

".....My point is that we don't have the level of public benefits that offset income inequality to the degree that is found in Europe and the UK...." Many benefits in the UK are means-tested, which means if you have any form of income, savings or property then you don't get the benefit, no matter how many years you have been paying taxes into the system.

0
2
Silver badge

Why? We have a welfare state, whose aim and purpose is to make us all richer. And, despite the sort of calumnies that people like me occasionally heap upon it, it does just this.

Um....no it doesn't. If the welfare state was making us all richer then the percentile at which the poverty line sits would be reducing. Instead the poverty line rests at a higher percentile every year as more and more people live in poverty.

Not that I'm saying that he's right about taxing the snot out of the top 1%, but you've got this point wrong.

2
3
Silver badge
Stop

Re: sisk

".....the percentile at which the poverty line sits would be reducing....." So you missed the whole bit where the 'poverty line' moves up to 'reflect' the rising level of living? For some, continually moving the line upwards allows them to carry on moaning about the 'equity gap', for others it is a way to remind us we should be looking to improve the lot of all citizens. But what we blithely refer to in the West as 'on the poverty line' today would have been considered the good life a mere hundred years ago, and better than the lot of many in less fortunate parts of the World.

1
3
Silver badge

Re: sisk

That's a load of bull Matt. That line moves because it is the measure of where you can be income wise and have a decent life. It doesn't move to reflect a rising level of living. It moves to reflect the rising COST of living. There's a big difference. The level of living is always the same at the poverty line, no matter where it's at. If you don't believe me I suggest you go talk to someone who's had the line move from below their feet to over their head in the last decade. There are plenty of them to be found.

As the poverty line moves up the percentile there are more people living in poverty. That's a product of the cost of living increasing faster than people's incomes. 'On the poverty line' today is on the freaking poverty line. Until you go hungry for a few days so that you can feed your kids (a pretty common situation for families living on the poverty line) don't go telling me how great it is to be there.

Sure, someone making $10,000 a year would have been pretty well off 100 years ago. But that was when you could easily feed a family of 4 with $20 a month. Sure, $5000 a year puts you in the top 5% of income earners in the world, but in most of the world you can STILL feed a family of 4 for $20 a month. When you quote those sorts of numbers you leave out the fact that it costs, bare minimum, $6000 a year just to keep a roof over your head and another $4000 a year to feed your family if you eat the cheapest foods you can get. Add in gas, electric, and water bills and it's dang near impossible to live in the first world at the poverty line. And those things aren't optional. 100 years ago you could cook on your fireplace and have an outhouse. Today fireplaces cost extra, and even if you have one you have to pay for the wood for it because they won't let you just go chop down trees in most of the country (even if you live somewhere where there ARE trees) and environmental regulations mean you're liable to run afoul of the EPA if you're using an outhouse. And yes, there are parts of the world that have it worse, where whole populations live in, you guessed it, poverty. That doesn't make you 'lucky' to be living in poverty here.

The bottom line is that poverty is poverty.

2
3
Silver badge
FAIL

Re: sisk

"....Until you go hungry for a few days so that you can feed your kids (a pretty common situation for families living on the poverty line) don't go telling me how great it is to be there....." Thanks, but I have actually been to many Third World countries and seen real poverty, and there is nothing like it in the West. When you meet kids that happily tell you they ate yesterday so they won't be eating today and they accept that as not just normal but good, then you can come and talk to me about poverty. Until you do you're talking out of your rectum.

Major denial - ".....100 years ago you could cook on your fireplace and have an outhouse...." There is nothing to stop you doing so today, and many families in the developing World still only have that option, but we in the West CHOOSE to insist on a higher standard of living as the baseline we consider acceptable. If you took a starving family out of somewhere like Ethiopia and gave them a council house with heating, running water that is safe to drink, cooking facilities and an indoor loo, plus free education and healthcare, but tell them the benefits system and cost of living means they can only shop for food and clothes at Asda, please do pretend they'd refuse.

"......The bottom line is that poverty is poverty." The constant steam of illegal immigrants desperate to get to Europe or the US just to get that 'poverty line' living you insist is unacceptable just goes to show you don't have a clue about the realities of the World or real poverty. Kindly do yourself a favour and go get some real World perspective.

3
5
JLV
Silver badge
Facepalm

Re: sisk

>Major denial - ".....100 years ago you could cook on your fireplace and have an outhouse...." There is nothing to stop you doing so today, and many families in the developing World still only have that option, but we in the West CHOOSE to insist on a higher standard of living

Matt, I assume your local building codes allow fireplaces and outhouses. Nice place you live in.

And, assuming they did let that happen, 'cuz you know, like rah-rah Libertarianism, those kinda living conditions would not impact the rest of us with their health effect. Cuz like, smog and cholera magically only impact the poor.

Apparently you wish to compare living conditions in say, Haiti, where there is general corruption, massive environmental degradation and pretty much no one can pay, or pays, taxes. Compare to say, the UK, the US or Canada where we have accountable governments, where most people are somewhat well off and where the country's wealth is sufficient to try to address at least some social problems.*

Of course, those brilliant and incisive comparisons of yours are going to win over all those poor deluded jackasses who think that not everything is A-OK with things as they are. Hey, I think excessive taxation causes more problems than it solves myself. I am soooo glad you are on my side, as you obviously have a way with convincing people who might think otherwise 8-). I can see everyone is gonna be lining up at the poll booths to vote for whomever you think worthy come next election.

* I'll even go further: where addressing some types of problems makes sense on a purely economic basis because it will make the country as a whole richer. This certainly applies to public education and health care.

1
3
Silver badge
Happy

Re: JLV Re: sisk

".....Matt, I assume your local building codes allow fireplaces and outhouses...." So there are no BBQs in your neighbourhood? And the UK Building Regs simply state there has to be a toilet connected to a sewage tank or to the main sewer with a new build home, not that it has to be indoors one. But I do laugh at your attempt to avoid the issue that what we consider essentials would be considered outright luxuries in a lot of countries.

"....Apparently you wish to compare living conditions in say, Haiti....." It was sisk that insisted "poverty is poverty" because he had no real World experience to gauge the realities of poverty with, not me. I suggest you point out the example of Haiti to him, but before you do you may want to consider the number of Haitians that seem desperate to avail themselves of 'poverty-line' living in the States.

".....I am soooo glad you are on my side, as you obviously have a way with convincing people who might think otherwise....." Sorry to disappoint (not), but shortly I will be swanning off into the sunset to laze out my days on my cache of filthy lucre, so I really couldn't give a fudge which numpty you vote for as it will have zero impact on me. But you go, girl, and don't forget to remind the scroungers to vote or they may lose the cushie free ride you will be paying for. Enjoy!

3
4
JLV
Silver badge

Re: JLV sisk

Hey, Matt, assuming you're gonna be an American retiree, you will, of course, forswear all that nasty socialist Medicare money, right?

Maybe you can go live in Haiti while you are at it. There's a definite appeal to me about you having limited access to broadband :) And sh***ing in an outhouse too ;-)

> toilet connected to a sewage tank or to the main sewer with a new build home, not that it has to be indoors one

Why the heck would you want to build an outdoor outhouse and then connect to the main sewage? That makes no $ sense whatsoever. Same plumbing, extra building. Even a sewage tank is expensive - I grew up in a house with one, albeit connected to an indoor toilet.

Another Matt-ism, perhaps?

1
3
Silver badge
FAIL

Re: JLV sisk

Yeah, whenever you finally get round to admitting you were wrong just remember to wake the readers up, they will have fallen asleep trying to read your lumbering evasion from the simple fact the majority of the World's human beings don't have indoor toilets connected to a proper sewage system.

2
3
JLV
Silver badge
Happy

Re: JLV sisk

Matty dearest, I really doubt you care how the majority of the world's people live.

Judging by the amount of downvotes you tend to collect, I think most people who have at times followed your rants hereabouts would agree with me. You read like a member of the subspecies of American right wingers who thinks social conservatism and dogmatic laissez-faire automatically results in effective economic policies.

I find Piketty's findings, as reported in the press, intriguing, but I also notice he's a French economist hailed as a hero there for his book. I am trying to keep an open mind, because I agree that inequality seems to be on the rise. But Piketty's background does worry me. Hollande's 75% tax bracket on French high incomes (straight out of Pikkety's playbook apparently), is, as previous French "rich taxes", not even guaranteed to bring in more money than it costs to administrate. This is in line with the French doctrine, inherited from Colbert, that the State always knows better how to manage & make money than individuals.

I am pretty sure we are both in agreement that Hollande is a looney. Where we disagree is that I think you are also a looney, but of the opposite kind. His policies are not clever and unlikely to make his country better off. Your "ideas" have about the same dogmatism and absence of rationality behind them, just in the opposite direction. Outhouses indeed!

Fortunately, your rants are less likely to make a mess than Francois's :-) Partially because it is easier to correct low taxes and low spending than it is to fix high taxes and high spending and erring on the low side is less pernicious economically. Also because few people really take you seriously (your approval ratings may still beat Francois' tho).

BTW, I never claimed third world isn't dirt poor and more so than anything hereabouts. I only called you an idiot for using it as a justification that makes it OK to disregard homegrown poverty. The difference is admittedly quite subtle and apparently lost on you. Let's just stick to the main point then: I called you an idiot and am happily restating that position.

1
3
Silver badge
FAIL

Re: JLV sisk

".... I really doubt you care how the majority of the world's people live...." Apart from the fact you seem to have me confused with someone that would actually consider your opinion of any worth, you know that you in fact know SFA about what I do or have done, either here or abroad, so your baaaah-lieve as to my charitable activities are not based on fact but sulking spite. If you wish to prove otherwise then please do supply details on my past. In essence, all you are doing is dressing up your lack of counter to my point with something you like to think is insulting, based on a fallacy you want to baaaah-lieve, but actually makes no impression whilst exposing to all your desperation. Please do fail more, it's quite amusing watching you wriggle and bleat.

".....Judging by the amount of downvotes you tend to collect...." So your analytical capabilities stop at following the opinion of the flock? Wouldn't it be novel if you tried actually thinking rather than simply following the lowest common denominator.

".....You read like a member of the subspecies of American right wingers who thinks social conservatism and dogmatic laissez-faire automatically results in effective economic policies....." Wandering much from the thread? Could it be because you can't argue the points raised? Gee, the sheeple have never used that tactic before! Seriously, we need new sheeple, these ones are getting boringly predictable.

"....I am pretty sure we are both in agreement that Hollande is a looney...." That should be 'loony'. And Hollande is just a typical popularist politician trying to garner support by sticking it to the rich. That doesn't make him a loon, it just makes him smart as he has managed to pull off such an obviously daft ploy and get away with it with the voters. As Depardieu showed, if you annoy the rich too much then the global market makes it vey easy for them to take their toys and cash elsewhere. It would be interesting to see if the change did lead to a noticeable drop or increase in tax revenues, but what Hollande really cared about was keeping his base happy in tough political times.

".....Your "ideas" have about the same dogmatism and absence of rationality behind them....." It is a simple fact that the majority of the World's population do not have clean drinking water, electricity or even regularly assured sources of food, let alone indoor loos or many of the other creature comforts we would consider normal at the 'poverty line' in the West. If you wish to pretend that my 'idea' is not true, that the statement has an 'absence of rationality', then please do provide some figures to prove if only so the readers can laugh at you more. You may wish to gain some insight here (http://www.unwater.org/water-cooperation-2013/water-cooperation/facts-and-figures/en/ and http://www.wfp.org/hunger/who-are and http://www.unesco.org/new/en/education/themes/leading-the-international-agenda/efareport/ and http://unstats.un.org/unsd/demographic/products/socind/Dec.%202012/4e.xls).

".....Also because few people really take you seriously...." Once again all you are exposing is your desperate desire to be part of the flock, to be accepted, to 'adjust' your views so that they are applauded by the sheeple around you. Individual thought is obviously not just unappealing to you, you actually think someone should be ashamed of it! Unlike Hollande, I am not in the business of popularity so I can speak my mind as much as I like, especially as I also have no great concerns about not fitting in with the flock. Please try not to assume everyone succumbs to the same character failures as you commit with zeal.

"..... I never claimed third world isn't dirt poor and more so than anything hereabouts. I only called you an idiot for using it as a justification that makes it OK to disregard homegrown poverty....." So, finally, after paragraphs of your vacuous venom, we finally get to your grudging admission that you can't actually disagree with what I stated, but then you try to diminish your surrender with a lie. I never said I was justifying homegrown poverty, I actually said some of us would use the raising of the poverty line as a way of hopefully advancing the lot of ALL in our society. What I objected to was your fellow-sheeple sisk's stupid claim that 'poverty is poverty'.

".....Let's just stick to the main point then: I called you an idiot and am happily restating that position." Which is the sum of your contribution - no facts, no figures, no independent thought, just bleated attempts at insults to dress up the fact you have lost again. This is my surprised face, honest! TBH, your efforts are quite yawn-inducing.

2
2
JLV
Silver badge

Here's a thought experiment

Small island nation-state with 1000 inhabitants.

999 citizens make $50K a year each.

1 person (rich _internationally_ selling author) has $5M income a year. This is NOT a realistic scenario, but I would strongly question why his income was 100x his fellow citizens if he made it on-island. I oppose very large income variations myself under most conditions, for example CEO pay levels are totally unfair. This is only about taxation redistribution. Nor is it about increasing wealth going to fewer people which we know is happening right now.

Total GDP is thus $55M. Everybody can vote. The state consumes 30% of the small earner's 50M GDP in services (public sector payroll, education, defense, welfare), which works out to $15M or 15K/person in tax (i.e. 30% income tax). The state can't run a deficit.

Mr. Big Shot can't bankroll everything, but if he is taxed at 80% he can cover 4M, thus lowering everyone else's tax bill to $11K or 22%.

Equally obviously, assuming a fair democracy (no lobbying), everyone else might vote for just that.

But it is still quite possible for everyone to be taxed at 30% income and balance the budget. Even if Mr. Big Shot pulled a Google and had his income declared in a Bermuda tax haven.

Questions:

If Mr. Big Shot's wealth is not due to exploiting everyone else, what are his ethical obligations? Pay 15K$, because he ain't costing the state more than anyone else? Pay 1.5M, because that's 30%, like everyone else? Pay 4M @ 80%, because that still leaves him with 1M, which is 20x everyone else's income?

Is it wise for the majority to vote budgets and taxes based on exceptional incomes? What happens if Mr. Big Shot is taxed heavily but then dies or decides to leave the country? But shouldn't Mr Big Shot's exceptional position be recognized and put to service? How not to kill the golden goose then?

Assuming the 999 citizens are willing to shoulder the general burden of the services provided by their government to themselves, how can Mr. Big Shot be more helpful to his countrymen? Charity? Good, but that is totally voluntary, so it might not happen.

Let's add 100 people who need welfare, due to no fault of their own, and can't pay taxes. What about using Mr. Big Shot's 30% (1.5M) to cover them, but leave the middle class $50K folks to cover their own benefits? I.e. what about the average citizen fending for her own taxes, but the rich supporting the poor?

Again, this is isn't about the ethics of income. It is about the practicalities, and ethics, of taxation levels assuming no differentiation between employment income and investment income.

In real life, Mr Big Shot's tax accountant would probably get him way under the 30%, which I think is totally unethical, as Warren Buffett pointed out before the 2012 elections (http://money.cnn.com/2013/03/04/news/economy/buffett-secretary-taxes/).

Let me be clear: I support neither the French model of high taxation for the few. Nor the US model of not caring for the poor. And I most certainly dislike the fact that you pay less taxes on financial/investment income than on employment income, even in France. I rather like the Swedish model, though I am not sure what works in a country of <10M inhabitant scales up and I am even less sure that public sector rent seekers would not guzzle up the bulk of the benefits like they do in France and in the US. Welfare and public spending is important to me.

2
2

Re: Here's a thought experiment

I don't think this thought experiment is particularly useful, except to show why thought experiments don't work. It's too simple - avoids considering consumption and pollution for example. No variation in ~1000 people? Mr Big Shot behaves identically to the others? (I'd suggest he doesn't deserve his earnings on that alone, boring fool)

I suppose I've just contradicted myself by showing various extensions of the experiment. Essentially most thought experiments (like this one) need to consider more context, and if that is done the beautiful simplicity of the experiment is lost.

1
0
Anonymous Coward

1) There is vastly more debt than money because of the way debt is created by banks. Without reforming this the idea that 'austerity' and cuts in welfare spending will balance the books is just nonsense. The neo classical model of economics is just plain wrong with regard to debt. See Prof Steve Keen's shredding of that myth.

2) One bus load of the top earners in the world earn the same amount as the bottom 3.5 billion. Is this trend in inequality sustainable ? Not unless they buy themselves a private army and live in a concrete bunker... Having individuals earn more than entire states, when millions are malnourished is morally wrong.

3) Welfare is highly selective in who is supported. If you are male and single, forget welfare helping you out.

4) Work does not pay. Half the people who turn up to food banks ARE in work - but high rents, and rises in the cost of living are causing significant poverty. (I've been volunteering in a food bank and I've seen it first hand. I get fed up with the airmchair know alls, who haven't. Either get out there and see what's happening or shut up).

5) The rise in right wing parties should be a concern. If the gap in inequality isn't addressed we are heading back to the 1930's.

2
3

Pinketty understands nothing

Part of political economy is who is in charge and/or well off and who is not. There is no good reason to much care about those.

The guts of it are three simple things: (1) Does the system often intentionally do horrid stuff to people and there is no remedy? Any State-centered regime tends in that direction...(2) Is the system internationally secure and competitive? (3) Do all sorts of folks and the majority of families see (a) opportunity and (b) on the whole increasing prosperity - more ability to choose and obtain desired goods, services, and circumstances?

When the answers are "NO", "YES", and "YES", one has found an exemplary system. Constitutional republican capitalism IS such a system, and so far anyway, the ONLY such system.

Wealth can not concentrate indefinitely...from whom would profits be obtained? Also, for the most part, unusual fortunes may proliferate but they do not tend to stay intact over time. Firms and family fortunes go up and down the relative ladder. Indeed, that is the key to why the constitutional republican capitalist regime is relatively fee, secure, competitive, and prosperous: what currently is valued tends to attract attention and investment, displacing that which has been surpassed in utility.

3
0

More class war from the register?

Yes because everyone on benefits gets a mansion in Mayfair while honest working people struggle to buy a shoebox. Read the daily mail by any chance?

1
5

"We have a welfare state, whose aim and purpose is to make us all richer."

WRONG ! ! !

The aim of the welfare state is to NOT have ordinary people confronted with beggars and people dying from hunger in the streets.

1
1
Anonymous Coward

The welfare state does not solve the underlying problem stated by Pickett

When capital is in the hands of few, then they can make capital a limiting factor in production. As a result, they can increase the return on capital and they hold immense political power (they are "system relevant" and can't go down without pulling the whole system along).

My grandfather came from a German family of serial company founders (pre-3rd Reich). He was of the opinion that every generation required it's own war to re-balance society: the destruction and chaos of war creates opportunities for everybody. Arguably, the US missed their wars in the ate 19th and early 20th century and thereby created the big depression.

The last half century of peace was different: due to the rules introduced after the depression, the capital owners did not manage to dominate the western societies. Many of those rules in the US were removed in the last decades and how the rules will work in China is not clear. It'll be very interesting to see where we are heading now. The welfare state may become the equivalent to the bread and games in Rome, something bankrolled by the rich to maintain the status quo. But Rome definitely relied on wars to create opportunities for their citizens.

1
1
Anonymous Coward

An alternate view.

Piketty's theories are based on some fairly fundamental errors in his research that challenge his underlying basis for cause and effect.

http://consultingbyrpm.com/blog/2014/06/full-review-of-pikettys-capital-in-the-21st-century.html

4
0

National vs international

I, like lots of westerners, have a lot of sympathy for the moderate left ideal of a system of constrained capitalism with relatively modest wealth imbalances that Pinketty appears to stand for.

There are several practical problems though:

1) All but the widest-eyed idealists acknowledge that there aren't enough resources globally to give everyone a decent standard of living even if we could somehow come to a consensus that we should. Successful lefty economies (of which Scandinavia offers the last unequivocal examples standing) have small, homogenous and highly educated populations and ample natural resources and are very picky about who they let in. To my mind creating small pockets of utopia is no more moral in the wider scheme than the US attitude of letting lots of people in but not giving them much except the knowledge that others before them have carved out a good living eventually.

2) Economic power always follows real power. When wealth gets too concentrated in the hands of people without the real power to protect it either revolution or punitive taxation always changes things. Similarly, and less fortunately, when the value of labour that poor people have to offer diminishes in real terms it becomes politically untenable to have too generous a welfare state without seeing a long run economic decline that makes everyone worse off.

At the moment we're seeing the consequences of a change in the real value of labour (which, sadly, I think is permanent) and a disruption to national politics from internationalisation which is benefitting the rich and well advised and weighing upon the poor and ill-equipped in a way that isn't sustainable. That's pushing the equation so far against the poor (and pushing so many of the middle class into 'poor' territory) that radical nationalism is starting to look attractive to them again.

1
1
Bronze badge

Re: National vs international

>Economic power always follows real power.

I think you've got that the wrong way round.

0
0

Re: National vs international

Are you sure? Turning wealth into power is harder than you think. Look at the oligarchs who have crossed Putin, for instance.

Granted wealth gives you a very comfortable life, but I see a history in which wealth follows power more than vice Versa, and being too rich while out of political favour is rarely comfortable.

1
0
Anonymous Coward

If I had his and he had more, we'd both be tickled.

The only people worried about differences in wealth are jealouse fools. I really don't care how much anyone else makes. I am focused on what I am making. The trouble I have is that I pay at least half my income in taxes of one form or another. Were it not for the governments and their tax codes, I would be doing far better than I am now.

Here is how I see it. Taxin incomes is both immoral and ineffective. Taxing consumption encourages thrift and is vastly more moral than taxing incomes. Most governments have this backwards, starting with France.

3
2
Anonymous Coward

Re: If I had his and he had more, we'd both be tickled.

Morality is subjective, so we can either discuss the bases of your moral code and find out where we differ or just agree that we disagree.

Effectiveness isn't subjective, but the measurement of it is. Income tax is by far the biggest source for most modern governments because it gives a more reliable and measurable take than other forms of tax (important for meeting spending commitments) and because one's ability to earn is generally agreed to depend in large part on the social, economic and political stability that those spending commitments help to provide.

There's a lot of economic debate over the optimum level and tiering of income tax and the extent to which it should flex in line with the economic cycle. There's very little serious debate on the question of whether there should be an income tax at all, and that debate is largely confined to libertarians (who want a flat and low income tax) arguing explosively with radical libertarians (who want no income tax at all).

2
1

Re: If I had his and he had more, we'd both be tickled.

There's very little serious debate on the question of whether there should be an income tax at all

Income tax in England was implemented to fund war with France. So it seems only right that we either:

A) Declare war on France

B) Abolish it, or at the very least prune it back to a morally acceptable level - say 20%.

Due to the widepsread misuse of income taxes, I currently spend 20 hours a week working just to pay tax to fund others. How much of their time do they spend each week making my life better?

3
1

This post has been deleted by its author

Anonymous Coward

Re: If I had his and he had more, we'd both be tickled.

A) as I said, very little serious debate.

B and onward) debating the right level and usage of income tax is absolutely valid, ongoing and fierce. The 'what are they doing for me' argument, however, doesn't constitute serious debate. The question is, rather, at what level of income tax are incentives to achieve balanced most effectively against the tax base required to sustain a stable economy in which the value of specialist skills can be maximised.

If 0% or even 20% were the correct answer then I contend that more advanced economies would successfully have used it (the same goes for 80% or even 50% which make no sense to me either).

3
2

Re: If I had his and he had more, we'd both be tickled.

The question is, rather, at what level of income tax are incentives to achieve balanced most effectively against the tax base required to sustain a stable economy in which the value of specialist skills can be maximised.

If 0% or even 20% were the correct answer then I contend that more advanced economies would successfully have used it (the same goes for 80% or even 50% which make no sense to me either).

To run as we do now? 45% of GDP.

To run efficiently, doing only what the state should be doing? 20% should be fine. It should be more than enough. There's also the moral component of demanding with menaces (threats of imprisonment and sequestration) half of the produce of someones labour to hand to those that do very little or do nothing at all.

The state has no business with diversity co-ordination, managing street football, etc etc. There's far too many non-jobs and administrators moving at a snails pace who should rightly be offshored, automated, or replaced by staff with a little get up and go.

A great example of this is Hector Sants. Rises to the very top of the public sector, but lasts 5 minutes in the private sector before going off with stress and exhaustion.

Last time I visited an A&E department the receptionist was literally doing 5 minutes work every hour. Then just sitting around waiting. In the private sector, she'd have been given other administrative duties to fill the void between booking in arrivals, and the clerk who used to do the role would be let go. Efficiency, you see.

3
1

Page:

This topic is closed for new posts.

Forums

Biting the hand that feeds IT © 1998–2017