Thomas Piketty seminar
December 9, 2015 1:50 AM   Subscribe

Discussion of Piketty's book on Crooked Timber On December 7 Crooked Timber began posting a seminar on Thomas Piketty's Capital in the Twenty-First Century. 2 responses to the book so far with 10 more to come, followed by the author's response.
posted by kingless (45 comments total) 40 users marked this as a favorite
 
Super excited for this.
posted by PMdixon at 2:07 AM on December 9, 2015


The Anderson piece and the ensuing discussion are very interesting, IMO.
posted by painquale at 2:30 AM on December 9, 2015


A Marxist take on Piketty: Piketty on Capital and Inequality
posted by Noisy Pink Bubbles at 3:19 AM on December 9, 2015 [6 favorites]


David Harvey's thoughts.
posted by colie at 4:05 AM on December 9, 2015 [3 favorites]


Super excited to hear such brilliant people's thoughts on this! Esp. Levi and Arrow
posted by MisantropicPainforest at 4:36 AM on December 9, 2015 [1 favorite]


Harvey's dismissiveness of the book surprised me. Granted, it does have explanatory flaws, and the strength is the data. But it seems to me that Piketty's book does do a great favor to radical politics (which is part of why the right is so upset over it) by pursuing the following line of argument:

1) The inherent tendency of capitalism is to magnify wealth and income disparities over time (essentially Marx's immiseration thesis, as Harvey points out)
2) The only policy solution to alleviate this is a global wealth tax

Piketty doesn't say the rest, but it seems to me the implication is that (2) is so obviously unimplementable under capitalism that some other way forward to equality needs to be found. Which leads us back to the origins of (1): a mandate to expropriate the expropriators.
posted by Noisy Pink Bubbles at 5:01 AM on December 9, 2015 [7 favorites]


Crooked Timber is such an excellent place. Always great reading.
posted by nofundy at 5:21 AM on December 9, 2015 [3 favorites]


One of my signal achievements this year was working my way through this book, which took me forever. (Although it was surprisingly entertaining for an economics text!) Now whenever anyone suggests their dumb economic ideas to me, I can scoff and be like, "Did you even read Capital in the 21st Century, bro?" THE ANSWER WILL ALWAYS BE NO, which, according to the laws of the universe, means they must therefore shut up.

(But thanks for the post, I'm excited to read other people talking about it, as I had nobody in real life to discuss it with when I finished!)
posted by Eyebrows McGee at 5:35 AM on December 9, 2015 [15 favorites]


It's a great book which everyone should read. And at least one of the Crooked Timber responses is pretty good.

But the right wing have already arrived at a set of responses to Piketty, and given the nature of Crooked Timber I suspect most of them will just follow those patterns.

Some background. A lot of the discussion of inequality has been on the basis of models and old data. Inequality fell between World War One andthe mid-Seventies, and there was a cosy assumption for a while that free markets left alone keep inequality from rising. It's challenging to study inequality globally over long periods because there are multiple different data sources.

The first important thing that Piketty did was to study lots of data sources in a rigorous way, and show that by all kinds of different measurements it's been steadily rising since the mid-Seventies. The second thing he did was to provide a theory as to why this is happening. The third thing was to suggest some possible solutions.

His observation is that small investors tend to earn 3%-4% interest annually on their fortunes, the richer get about 6%, the super-rich about 10%. His proposal is an international wealth tax, starting with the EU. People with assets less than a million Euros pay nothing. People with 1-5 million Euros in assets pay 1% annually. People with more than 5 million pay 2%. This level of taxation allows individuals to still increase their wealth. But combined with the other effects that reduce inequality, such as fortunes being split up across multiple heirs, it will stop inequality spiralling out of control across the whole of society. This wealth tax doesn't have to be a tax increase: existing taxes could be reduced by the amount gathered.

Naturally everyone on the right wing has utterly flipped their shit at this. They regard it as an absurd, crazy and horrific assault on the right to own property.

The first way they counter Piketty is firstly by nitpicking at the data. Piketty's strength is that there are many different data sources. But that also means there's a lot of room to look for problems in the data. There are a lot of posts in the right wing blogosphere pointing at little weaknesses, most of which he has acknowledged, implying that they totally undermine his argument. The second way is to ignore empiricism altogether and try to produce models instead. The third is to try to find reasons where the trend in inequality is somehow about to turn around, and therefore requires no action to fix. I suspect most of the Crooked Timber responses will be variations on these themes.
posted by TheophileEscargot at 6:24 AM on December 9, 2015 [16 favorites]


I can scoff and be like, "Did you even read Capital in the 21st Century, bro?"

If you read À la recherche du temps perdu (and maybe Ulysses), you can do the same for every cultural discussion, too! It's a grand trick!
posted by GenjiandProust at 7:11 AM on December 9, 2015


It's a great book which everyone should read.

I read it. it's extremely repetitive and could have been condensed to monograph form.

the strength really is the data, but the the take away is just how intellectually impoverished academic economics is: one of the reasons the data work is so powerful is that no one else has really tried to measure capital over long time periods. and the whole discussion of labor elasticity demonstrates nothing so much as how academics economics takes crude 1st order models and treats them as gospel.

it's not a great book, but it's cachet is a sign of just how far things have unraveled. it's a shame "left" intellectuals like Harvey are still playing theological games with Marx.
posted by ennui.bz at 8:13 AM on December 9, 2015 [1 favorite]


The fact that the right attacked Piketty for his data collection--which is like one of the most massively impressive feats in social science--just shows how stupid and unserious about knowledge they are. If they actually knew the literature, they would know that the expansion of capitalism is strongly associated with a reduction in interstate wars, and the evidence that Piketty finds is entirely consistent with this claim. But, you know, the right wing.
posted by MisantropicPainforest at 8:15 AM on December 9, 2015 [3 favorites]


and the whole discussion of labor elasticity demonstrates nothing so much as how academics economics takes crude 1st order models and treats them as gospel.

This, I am happy to report, is simply not true anymore. It was probably true about a decade, maybe 15 years ago, but fortunately economics has gotten much less theoretical and more empirical. Most of the works published in the top journals have a heavy empirical component.
posted by MisantropicPainforest at 8:16 AM on December 9, 2015


But the right wing have already arrived at a set of responses to Piketty, and given the nature of Crooked Timber I suspect most of them will just follow those patterns.

Is the suggestion here that Crooked Timber is a right-wing blog?
posted by kenko at 9:12 AM on December 9, 2015 [1 favorite]


Naturally everyone on the right wing has utterly flipped their shit at this. They regard it as an absurd, crazy and horrific assault on the right to own property.

The first way they counter Piketty is firstly by nitpicking at the data. Piketty's strength is that there are many different data sources. But that also means there's a lot of room to look for problems in the data. There are a lot of posts in the right wing blogosphere pointing at little weaknesses, most of which he has acknowledged, implying that they totally undermine his argument. The second way is to ignore empiricism altogether and try to produce models instead. The third is to try to find reasons where the trend in inequality is somehow about to turn around, and therefore requires no action to fix.


This is a pretty good model that applies elsewhere - for example, with climate change, or structural political reform, or arguments about 'the right level' of intellectual property protection. Those that prosper under a system tend to consider it good and thus preordained as correct, and apply this set of arguments against those who disagree - who may be those who don't do well, or those who do well but are convinced that its downsiides outweigh the up. The latter are the most dangerous (assuming the excluded don't actually revolt) and will attract the fiercest fire.

I think it's an expansion of one aspect of the "first they ignore you, then they laugh at you, then they fight you, then they join you" truism. Whether a theory of effective counter-process can be evolved, other than 'keep banging on about the data, keep testing your assumptions, keep in the game', is an interesting thought exercise.
posted by Devonian at 10:01 AM on December 9, 2015


The fact that the right attacked Piketty for his data collection--which is like one of the most massively impressive feats in social science...

to the extent that it's impressive, it's because the data itself is scant, even for modern epochs, but it's afeat mainly because no one has really bothered to try to synthesize what data there is in any systematic manner for over 70 years. it says more about economists in capitalist societies, than the work itself...

This, I am happy to report, is simply not true anymore. It was probably true about a decade, maybe 15 years ago, but fortunately economics has gotten much less theoretical and more empirical.

you wouldn't know that from the arguments in piketty. but how much of this recent work is driven by "freshwater" derived agent modeling?

Is the suggestion here that Crooked Timber is a right-wing blog?

CT seems driven by Bertrand and Quiggen: a libertarian philosopher and a non conformist economist. I would call that the "liberal" wing of the right, but then I consider Sen. Elizabeth Warren to be right wing...
posted by ennui.bz at 10:10 AM on December 9, 2015


but then I consider Sen. Elizabeth Warren to be right wing...
“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”
posted by PMdixon at 10:12 AM on December 9, 2015 [5 favorites]


In Ennui's defense, an alumni of Harvard law and member of the US Senate doesn't put her anywhere near the left-most pole of the political spectrum. It's not like the Democratic party has been polishing its bonifides much lately.
posted by Reasonably Everything Happens at 10:51 AM on December 9, 2015 [3 favorites]


The New Left Review might be surprised to learn that former editorial committee member Chris Bertram, whose name is so spelled, is a libertarian.

The reception Piketty has received at CT is nothing like what TheophileEscargot describes, though that is a feature of his reception in the actual right wing.
posted by kenko at 11:02 AM on December 9, 2015 [1 favorite]


I also have no idea why you call Bertram one of the two drivers of CT.
posted by kenko at 11:05 AM on December 9, 2015


In Ennui's defense, an alumni of Harvard law and member of the US Senate doesn't put her anywhere near the left-most pole of the political spectrum.

Right, why bother to consider her actual positions and rhetoric when we could just look at her associations instead?
posted by asterix at 11:05 AM on December 9, 2015 [3 favorites]


“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”

She's not right-wing -now-, but the fact that she used to be a registered Republican should tell you something about how skewed (to the right) politics has become in the United States.
posted by longdaysjourney at 11:06 AM on December 9, 2015 [2 favorites]


In Ennui's defense, an alumni of Harvard law and member of the US Senate doesn't put her anywhere near the left-most pole of the political spectrum.

If only we knew more about Warren than that she's an alum of Harvard LawThe Rutgers School of Law and a member of the US Senate! Or if someone could be on the left broadly construed without being on the left-most pole. She can be progressive in our benighted country without actually putting dyed-in-the-wool communists to shame.
posted by kenko at 11:07 AM on December 9, 2015 [1 favorite]


the fact that she used to be a registered Republican should tell you something about how skewed (to the right) politics has become in the United States.

That's only true if you assume that her positions have remained fixed the entire time. Or that she wasn't mistaken (at the time) in the beliefs that led her to register as a Republican.
posted by asterix at 11:11 AM on December 9, 2015


In Ennui's defense, an alumni of Harvard law and member of the US Senate doesn't put her anywhere near the left-most pole of the political spectrum.

Yeah, and what about that son of rich Rhineland capitalists who spent his life swanning about the Reading Room of the British Library, financed by a Manchester textile manufacturer? What a right-wing shithead he turned out to be.
posted by AdamCSnider at 11:30 AM on December 9, 2015 [9 favorites]


What an embarassing thread.

We have blanket dismissals of entire fields of inquiry, characterizing people like Chris Betram--for fucks sake a former student of Jerry Cohen, you know the guy who wrote such right-wing screeds like Why Not Socialism?--as some sort of quasi-right wing and certainly not left wing libertarian. Dismissal of notable left wing figures based on where they went to school or what they studied (Quiggin can't be a leftist because he is an economist, don't you know). The general dismissal of Crooked Timber as a right wing blog because they criticize Piketty is just stupid.

What we dont have here is a discussion. Criticism is the heart of social science and the expansion of knowledge. I guess constructive engagement with a text is something only the bourgeois do.
posted by MisantropicPainforest at 11:35 AM on December 9, 2015 [8 favorites]


Only metafilter commenters can criticize from the left. All other criticism is from the right.
posted by kenko at 11:43 AM on December 9, 2015


“When I use a word,” Humpty Dumpty said, in rather a scornful tone, “it means just what I choose it to mean—neither more nor less.”

Sen. Warren's main concern is that lawlessness has rendered Wall Street inefficient. It's funny that being for law and order in the financial sector is all it takes to be on the "left." Nothing she has advocated for the financial industry couldn't have been said by Paul Volker. Fundamentally, she wants Wall Street to work better. The craziest thing about the mortgage bubble which preceded the crash, was how the banks involved were deliberately destroying the concept of 'title to property' itself: property! Title fraud practised by big banks was and is rampant. Goldman-Sachs doesn't believe in capitalism, it believes in Goldman-Sachs. It's people like Warren who actually believe capitalism is a workable system, if you just could keep the bankers from constantly trying to defraud everyone...

characterizing people like Chris Betram--for fucks sake a former student of Jerry Cohen, you know the guy who wrote such right-wing screeds like Why Not Socialism?--as some sort of quasi-right wing and certainly not left wing libertarian. Dismissal of notable left wing figures based on where they went to school or what they studied (Quiggin can't be a leftist because he is an economist, don't you know). The general dismissal of Crooked Timber as a right wing blog because they criticize Piketty is just stupid.

So, what about Bertram makes him a socialist, other than guilt by association? Larry Cramer was a Sparticist ffs... I think of Bertram as a libertarian based on his contributions to Crooked Timber... enlighten me. But looking at his contribution to CT's Piketty-fest you can see my point. As our society moves backwards towards feudal aristocracy, being a 19th century 'L'iberal concerned with personal liberty, contracts, and the rule of law puts you on the "left," where throughout the 20th century you would have been on the right. Bertram's essay is about how 'inequality' derives from moral values, not capitalism.
posted by ennui.bz at 11:56 AM on December 9, 2015 [2 favorites]


It seems you have very private definitions of words that few people share. Anyway, labels aren't terribly useful here, it seems tainting someone as a libertarian or (gasp!) a right-winger is simply a cudgel that prevents constructive engagement.
posted by MisantropicPainforest at 12:03 PM on December 9, 2015


It's funny that being for law and order in the financial sector is all it takes to be on the "left."

It's funny that you put the word "left" in quotes considering I didn't use it, or make any implicit claim about Warren's politics beyond that they aren't right wing, which I will happily stand by, for any useful sense of 'right wing'. You said something ridiculous, I pointed it out. No one's looking for Warren to lead the next Kronstadt mutiny.
posted by PMdixon at 12:05 PM on December 9, 2015


Sure could use less discussion of which Yeoval definition to attach to public figures and more engagement with the arguments and discussion, hey?
posted by smoke at 1:00 PM on December 9, 2015


but fortunately economics has gotten much less theoretical and more empirical. Most of the works published in the top journals have a heavy empirical component.

That's exciting. Do you think we can expect more work like Piketty's -- empirical, broad in scope, historically-oriented -- to emerge over the next decade or so? It seems to me (as a total outsider to economics) that economic history ought to be the primary driver of economic thought, but I have the sense that it's traditionally been a pretty unsexy subfield.
posted by Gerald Bostock at 1:01 PM on December 9, 2015


more engagement with the arguments and discussion

Levi's piece seems to capture best what I most took from Piketty: that organizational forms and the distribution of surplus are not mere epiphenomena sitting on top of a heap 'o stuff, but rather major causal players in their own right.

Will be excited to see Arrow's piece.
posted by PMdixon at 1:06 PM on December 9, 2015


it's a shame "left" intellectuals like Harvey are still playing theological games with Marx.

So what exactly is the issue with Harvey or Marx? Because taken alone, the assertion is just a smear, but I'm willing to extend benefit of doubt and suppose that ennui.biz meant something deeper, but didn't elaborate and assumed everyone's knowledgable/updated in this area.
posted by polymodus at 1:48 PM on December 9, 2015


Harvey's review linked above was a pretty quick read. He has a better grasp of the theoretical issues in Capital, and his explanations basically show that Piketty did not have this grasp and so it screwed up his methodology in a fundamental way (by incorrect valuation of "capital"), and thus also his general argument (the interpretation/explanation). Harvey doesn't necessarily completely disagree with Piketty, rather, he finds Piety's account unsatisfactory - the process of it, to reuse Harvey's word. And implicit to the critique is that this difference is important, because conceptual frameworks matter - taking care to ask the right questions in the first place, etc. It's part of the scientific process anyways.
posted by polymodus at 3:01 PM on December 9, 2015 [1 favorite]


conceptual frameworks matter

here, here.

It's funny to be taken as unneccesarily harsh on Warren to correctly call her out as a centrist (relative to a myriad of other positions). She is only the patron saint of conventional american financial liberalism. This isn't a criticism, only an observation!

It can be argued both in terms of GNP and people-voting-with-feet that there are multiple majorities to the left of her in economic terms.



PS- I'm using financial liberalism in the american sense, not the continental sense
posted by Reasonably Everything Happens at 3:50 PM on December 9, 2015


This... is a very odd thread.
posted by GenjiandProust at 4:04 PM on December 9, 2015 [2 favorites]


That's exciting. Do you think we can expect more work like Piketty's -- empirical, broad in scope, historically-oriented -- to emerge over the next decade or so?

It has and it has been done for decades, but hasn't seeped into the popular idea of a 1950s Friedmanite economist. Douglass North won a Nobel Prize for it. Acemoglu will most likely win a Nobel Prize for it too.
posted by MisantropicPainforest at 4:51 PM on December 9, 2015 [2 favorites]


This is indeed an odd thread.

Crooked Timber's longevity is a testament to its contributors, and to some degree its commentariat, and the house ideology is European-style social democrat or Anglo-Irish left-liberal. The seminars are always worthwhile: they're the site at its least bloggy, and academic-smart, but not usually academic-up-your-own-arse. (If you're not interested in Piketty, then look at the China Miéville and Susanna Clarke events.)
posted by holgate at 6:50 PM on December 9, 2015 [2 favorites]


the China Miéville event

Whoa! How did I miss this? This is so up my alley. Thank you!
posted by painquale at 3:12 AM on December 10, 2015


just a few stray thoughts on some of the entries so far :P

there's a lot of emphasis on rentier/crony capitalism vs. the 'value-added'/entrepreneurial kind, and while i think people can agree that the latter is preferable to the former, at least conceptually, the rentiers and cronies of the world of course will always claim they're the 'maker' sort -- oh, look at my philanthropy -- or wrap themselves in the flag; witness the military/prison industrial complex. now move on down the line of different 'industries' -- i'd single out finance, health care, education and telecom as essential 'services' in particular[1] -- that have high barriers to entry (erected) where it's often hard to tell what 'value' (purposefully obscured and inflated) you're getting and, coincidentally, areas which have seen big privatization and deregulation pushes over the last few decades. now think about this in terms of racial inequity (or a jobs program for white people).[2]

so there's a vast territory to be mined simply documenting the procedural 'tricks and traps' (as elizabeth warren likes to call them) -- for example, ta-nehisi coates on chicago housing policy -- that are 'socially useless' activities (or actually harmful but billed as helpful) that only serve to enrich the politically connected, which the anderson piece does admirably! a lot of this stuff you have to track over time, like say pollution, where there's an initial benefit -- driving around -- but where the carbon costs are paid later, or like follow to disaffected groups that are politically marginalized, to see the true social costs... and not just domestically[3] (e.g. the ~$2tn iraq war that has claimed 100,000+ iraqi lives; what if it'd been spent on foreign aid instead -- invested in 'capacity building' -- would attitudes towards america be more constructive? nevermind the refugee situation).

that's the kind of program that levi outlines as i read it. sort of a taxonomy of negative externalities (or positive ones withheld), public goods privatized, and (un)natural monopolies parceled out for patronage or, more generally and prescriptively, as paul mason puts it, "not only do we need something better than the market for distributing goods, we also need something better than the finance system for allocating capital... we need to focus on where the externalities are being generated and distributed," particularly as brad delong says, "a larger and larger wedge emerges between growth in utility as measured by true willingness-to-pay and growth in real measured national product." (except that even 'real measured national product' is now falling; a worrying sign: "We have seen company profits shrink in Q3... Historically this is a pre-recession trend.")

as to the politics of it, check out robert reich and joseph stiglitz in conversation about their deep misgivings around the neoliberal order entrenched during the clinton administration, particularly with robert rubin as sec treas. threatened over the use of 'corporate welfare', the unchecked rise of stock options (and backdating) in executive 'performance' compensation, etc. i wished it was publicly available, but in this robert reich conversation with mark bittman, he also talks about being strong armed into supporting welfare reform.

interestingly, and worth noting per this thread, reich was starting off his book tour speaking engagements with a bit about 'saving capitalism' (the title) and how the audience divides into those offended by the implication that there's anything wrong with capitalism and others irked by the idea that capitalism is worth saving, before attempting to unify or at least rally people behind what he views as the more important subtitle, 'for the many, not the few'. in his view, right vs. left and red vs. blue is a (deliberate) distraction/smokescreen to corporations vs. everyone else, but perhaps has set off a fire that has gotten of control of its corporate masters. in any event, reich seems more sanguine than piketty about a return to patrimonial capitalism, if only because he sees the stirrings of violent revolution more clearly.

back to the seminar; one of claims that anderson makes that i find intriguing is that: "It's much easier for the top 1% to make money by creating and exploiting opportunities to gain at the expense of everyone else," with the corollary that it's become harder to "add net value to the economy," where the median standard of living improves -- i.e. are you better off than your parents? will our kids be better off than us? -- but why has rentierism > entrepreneurism? in my mind, there's a whole robots and automation debate, coupled with its precursors in zero marginal cost information goods and services, network economics and winner-take-all markets, that can be had within the wider context of technology, globalization, demographic and environmental trends and developments, of which rentierism is just one manifestation (i'd also point to negative interest rates as another obvious major symptom, as well as the rise of 'bullshit jobs'). but i think all this can be distilled down further into the changing nature of value and wealth; how is it measured?

in an agricultural or industrial era, a gold standard largely worked i think because use value and exchange value remained roughly equivalent. but as delong and others say, there's a growing 'wedge' between the two. you're no longer rich by having land[4] and cows or owning a factory, but by understanding how information organizes people and the physical world around us. having access and being able to collect, analyze and control that data, and command attention with it, is the source of wealth in the 21st century, not money per se. yet our 20th century institutions all still sclerotically revolve around it. as it stands, growth and productivity measured in monetary transactions will likely continue to stagnate unless broader measures of well-being are also taken into account.

well that'll never happen you might pessimistically/realistically say, because that entails the ancien régime would voluntarily give up their power and privilege; only at the barrel of a gun or beheaded face up by guillotine, with their institutions of oppression in smoking ruins, would they ever cede control at the top of the status hierarchy. but what if there was a way to flush the system or reverse the polarity as it were, at least for a time, to provide capitalism some breathing room (or shock the patient) to adapt to a new, what i would call, humanism?

---
[1] but it's a free market, right? no one's forcing people to pay for this stuff; it's all voluntary. they're just charging what the market will bear, what they're willing to pay.

[2] who are the 'landlords' of the service economy and who are its tenants?

[3] incarceration should be seen as a national tragedy, waste, #fail and embarrassment.

[4] well maybe land, as matthew rognlie's critique of piketty suggests, and makes the case for a land value tax more compelling (and easier to implement) than a global wealth tax.
posted by kliuless at 4:04 PM on December 11, 2015


The Melting Away of North Atlantic Social Democracy - By J. Bradford DeLong
posted by the man of twists and turns at 8:33 AM on December 23, 2015


(thanks the man of twists and turns! i've been waiting for those last few articles in TPM's inequality series to drop ;)

so to tendentiously intertwine CT's piketty seminar with TPM's inequality series, let's start with delong's typically comprehensive and succint summary:
The social democratic economy model the major North Atlantic economies followed as recently as a single generation ago had five salient features. First, that labor was important relative to ownership of wealth as a source of income. Next, enterprise and savings were important relative to inheritance as a source of accumulated wealth. Opportunity, while constrained by race and gender, was not that constrained by class—there was upward mobility. Economic growth—both numbers of workers and the productivity of the average worker—was relatively rapid, with each generation clearly larger and more productive than its predecessor. And finally, politics were relatively democratic, in that while the rich spoke with a louder voice, their concerns did not drown out the economic interests of others.

And Thomas Piketty’s central claim is that all five of these once-salient features of our social democracy are vanishing. We are, he believes, on a long-run historical trajectory to return us to a situation more like the nineteenth century, in which ownership of capital is more important relative to labor as a source of income; inheritance dominates enterprise and savings as a source of wealth; opportunity is tightly constrained by class of birth; economic growth is slow (both because of declining technological invention and birth rates on the one hand, and because established wealth, which is hostile to the creative destruction that drives economic growth, possesses a bigger voice in shaping the political economy); and politics is dominated by plutocrats.
delong finishes with: "our politics is something we can control. We as a civilization could decide that we are not willing to let money talk so loudly in politics. We could keep our politics from being one of establishing monopoly after monopoly and rent-extraction chokepoint after rent-extraction chokepoint."

so lets work backwards; how would we 'take back' our politics (or country, as trump supporters would have it)?

in jared bernstein's TPM entry, he prescribes: "To lower today's levels of inequality, policy would need to accomplish two broad goals: raise the bargaining power of the American worker and lower the political clout of the wealthy elite."

while berstein outlines some broad tactics: "more collective bargaining... active fiscal and monetary policy working together to generate full employment... more attention to both dollar (exchange rate) and manufacturing policy... Direct job creation... better oversight of financial markets... less money in politics, and less privileging of unearned incomes in the tax code..."

i think jw mason in the CT seminar (whose entry i particularly liked because it ref'd both rognlie, who delong also mentions, and perry mehrling's 'money view') offered better specifics in It's bargaining power all the way down:
Another, perhaps more directly relevant case, is the case of Germany. Germany, by income one of the richest and most equal countries in Europe, has among the lowest and most unequal household wealth. In addition – and not unrelatedly – German corporations have unusually low stock market valuations... The first puzzle, that of low and highly skewed market wealth, is largely explained by low levels of homeownership in Germany. Compared with most other rich countries, middle-class Germans are much more likely to be renters. This does not mean that their housing is any lower quality or less secure than in other countries, but it does mean that the same physical house in Germany shows up as less market wealth...

In other words, one reason household wealth is low in Germany is because German households exercise more of their claims on the business sector as workers rather than as wealth owners... this sort of story about the strength of shareholder claims under different institutional arrangements probably has more to say about the actual evolution of the capital share than the whole apparatus of growth theory...

The same acts of saving and investment that allow society to increase its material production, also ensure that an increasing share of that production will be claimed in the form of capital income, even while the great majority of us continue to depend for our income on labor. So it’s futile to try to change the distribution of income directly; all that can be hoped for is redistributive taxes carried out by the deus ex machina of a global state...

It’s bargaining power, it’s politics, all the way down. The same kind of redistributive projects – the decommodification of basic services like healthcare, pensions, and education; the increased bargaining power of workers within the firm – that were responsible for the fall in the capital share in the mid 20th century were responsible, in reverse, for its rise since 1980. In which case we can learn as much about our possible futures from the 20th century decline in the claims of property over humanity, as from their recent reassertion.
and then on to martin o'neill's Piketty, Meade and Predistribution:
The sense that Piketty’s book should be seen as a deeply pessimistic one is brought into full focus when we consider the single policy proposal for which he is best known: that is, the idea of a progressive global wealth tax... more importantly, he also has a more ambitious agenda, speaking of the need for a comprehensive democratic capture of capitalism... This would involve ‘the development of new forms of property and democratic control of capital,’ with regard to which ‘new forms of participation and governance remain to be invented’ (p. 569)...

On Meade’s view, traditional methods of redistribution simply did not go deep enough, dealing – after the fact – with the symptoms of underlying inequality, rather than providing a more fundamental cure by restructuring patterns of individual and collective ownership within the economy. Only the more fundamental strategy could ensure, stably and in the long run, that the increase in the capital share of national income would be made to work for everyone, and not just for a narrow class of plutocrats. Egalitarian strategy had to be proactive, rather than merely defensive...

Meade’s property-owning democracy involves, in effect, changing the nature of property rights such that wealth is much less easily transferable across generations, given that it would be subject to high rates of taxation with regard to both inheritance and gifts inter vivos. Wealth would be dispersed across the population, with individual capital holdings for all viewed as an entitlement of citizenship, and the use of a myriad of mechanisms that would spread the returns to capital as broadly as possible. Such mechanisms could take a large number of different forms, including ‘the encouragement of financial intermediaries in which small savings can be pooled for investment in high-earning risk bearing securities; measures to promote employee share schemes whereby workers can gain a property interest in business firms; and measures whereby municipally built houses can be bought on the instalment principle by their occupants’ (EEOP, 59). The goal would be both to spread capital returns widely across society, and to overcome the forces for divergence between larger and smaller investors.

This ‘property-owning democracy’ was, though, just half of Meade’s strategy of (in my terms) ‘capital predistribution.’ The other half – his ‘Socialist State’ – involved the creation of forms of collective, democratic wealth. Meade envisaged the creation of public institutions akin to the sovereign wealth funds that have come to play an increasingly important role in the world economy, such as the Alaskan Permanent Fund or, most impressively, the Norwegian Statens Pensjonsfond Utland (SPU), a collective investment vehicle that owns roughly 1% of global equities. Such forms of public and democratic wealth ownership could be used to fund a citizens’ income (as in the Alaskan case), or in any other democratically authorized way that allowed the socialization of increasing returns to capital, and the decoupling of individual life-chances from excessive dependence on outcomes in the labour market...

Meade believed that a more egalitarian future would involve the state doing three things – (i) strengthening the provision of public goods and income transfers through the traditional mechanisms of the social state, whilst simultaneously pursuing capital predistribution in both its (ii) individual and (iii) collective forms... Piketty describes himself as ‘following in the footsteps’ (p. 582) of Meade (and of Meade’s student and Piketty’s collaborator, Tony Atkinson)... he had this to say about the relationship between his thinking and Meade’s proposals... in his recent Journal of Economic Perspectives article, ‘Putting Distribution Back at the Center of Economics: Reflections on Capital in the Twenty-First Century,’...
I may have devoted too much attention to progressive capital taxation and too little attention to a number of institutional evolutions that could prove equally important, such as the development of alternative forms of property arrangements and participatory governance. (Piketty, 2015, p. 87)
[I]t is no part of Piketty’s view that we can rely on a simple technocratic fiscal fix to solve the problems ahead of us. Mechanisms of redistribution will not be sufficient, but will have to be supplemented by more radical forms of predistributive institutional innovation. If solutions to the problem of inequality are to be as radical as reality now demands, what is instead required is a reimagining of what would be involved comprehensively to tame capitalism through democratic means... On the success of this endeavour depends nothing less than the prospects for legitimate continuation of our economic system.
so as mason (and delong) mentioned earlier -- "It’s bargaining power, it’s politics, all the way down." -- which gets us close to the beginning again with the current political situation on the ground with john judis in TPM, The Paradoxical Politics of Inequality:
Why is there only marginal support for reducing inequality by raising taxes on the rich and opposition to government measures that would narrow the gap between rich and poor? Political scientists attribute this to a profound distrust of the national government that translates into opposition to any active government measures that would increase taxes or spending... those who evince a knee-jerk opposition to government spending and taxes believe that they are paying taxes to finance spending for the undeserving poor. Sometimes they have identified this group with African Americans, but more recently with illegal immigrants. Even if middle- or working-class Americans think a particular group of the poor is deserving, they worry that they, and not the wealthy, are footing the bill. And their perceptions are often correct given the way taxes are levied on the wealthy. So Americans’ distrust of government is often intertwined with the belief that their taxes would go to the undeserving poor...

The two groups most supportive of government programs to reduce inequality are minorities, particularly African Americans, and people with advanced college degrees, many of whom are professionals such as teachers or engineers. In the 2014 survey, for instance, whites with advanced degrees favored using government to close the gap between rich and poor by 54 to 38 percent (with the rest falling in between favor and oppose). The groups most opposed to these kinds of programs were whites in general who did not have an advanced degree, from college grads to those with less than a high school education. Surprisingly, however, the group most opposed to helping the poor (41 to 19 percent) or equalizing incomes (53 to 33 percent) comprised whites who had completed four years of college, but did not have advanced degrees. These Americans, as economist Stephen Rose has argued, are people who primarily work in lower and middle tiers of the office economy...

What, then, can those who want to use government to reduce income inequality do to get results now? In her recent book, The Undeserving Rich, sociologist Leslie McCall observes that the public’s concern about inequality does not necessarily jibe with the actual rise in economic inequality but with how they evaluate their own and their children’s economic opportunities. Pessimism about opportunity and concern about inequality grows during recessions and the first part of halting recoveries like the recoveries from the 1991 downturn or Great Recession. Pessimism about opportunity doesn’t fall off until a boom visibly begins, and at that time concern about economic inequality also subsides. It subsided during the Clinton boom of the late 1990s even though the gulf between the one percent and everyone else grew significantly during this period. We are presently still in the halting recovery from the Great Recession when Americans remain pessimistic about their futures and concerned about inequality.

In a forthcoming essay, “Political and Policy Response to Problems of Inequality and Opportunity,” McCall turns this observation into a proposal for addressing inequality. She distinguishes between proposals that would create equality of outcomes and those that would create equality of opportunity. Politically, Americans have been averse to proposals that would simply create equality of outcomes, but they have been receptive to proposals that would widen economic opportunity. McCall argues that proposals that raise taxes on the wealthy in order to widen economic opportunity or promote economic growth (which is seen as increasing opportunity) have the best chance of winning public support. She calls her strategy “equalizing outcomes to equalize opportunities.”

McCall cites an Oregon initiative adopted in 2010 that raised taxes on household incomes above $250,000 in order to “provide funds currently budgeted for education, health care, public safety, other services.” In 2012, she notes, California voters passed a similar initiative that temporarily raised taxes on the wealthy to fund education and public safety... proposals for reducing economic inequality have to be tied clearly to achieving desirable objectives other than simply reducing inequality.

A second lesson is that, in general, appeals for government to reduce inequality have to be related to objectives that benefit all, or almost all, Americans. They can’t be tied simply to the poor or to minorities. Sanders is careful to talk about the “gap between the very rich and everyone else” and Warren rails against the government being run “for the top ten percent.” And Sanders and Clinton have both directed their appeals toward aiding what Sanders calls the “collapsing middle class.” That goes for the programs themselves, as well as the rhetoric. Social Security and Medicare remain popular because they are universal programs. The Obama administration, eager to fend off business lobbies and get its proposal through Congress, introduced elements into the Affordable Care Act that made it appear directed primarily at the uninsured; that’s what has invited the public’s disapproval of the plan.

A third lesson is that at least in this election, the proposals themselves cannot be so ambitious that they raise fears about higher taxes and greater spending... For the present, proposals to reduce inequality will have to be linked to more modest objectives that can be pursued incrementally. A candidate like Sanders could argue persuasively that by advancing these kind of bold proposals now, he is preparing the ground for public acceptance of this approach in the years to come. But he can’t argue that a majority of Americans would now find them acceptable.

To be sure, Americans have adopted measures that have dramatically reduced inequality... There were three conditions that prevailed during the Progressive and New Deal eras. First, there were sharp downturns and panics. There was a depression in the 1890s and a financial panic in 1907, and the Great Depression spanned the 1930s. Second, there was genuine immiseration. During the progressive era and the first six years of the Great Depression, unemployed Americans had to fall back on charity in order to survive. Americans at both times stood in danger of losing their life savings from bank runs. Americans in the 1930s, historian Alan Brinkley wrote in Voices of Protest, “stood in danger of being plunged back into what they viewed as an abyss of powerlessness and dependence.” Third, there were large, powerful movements demanding the reduction in economic inequality: the Populists, the Socialist Party, and American Federation of Labor during the progressive era, and the fledgling industrial union movement, the Socialist and Communist parties, and Huey Long’s Share the Wealth Clubs, which claimed three million adherents, during the 1930s. During the 1960s, there was no economic downturn, but America’s leaders had to unite the country to fight a war and maintain peace at home in the face of a large anti-war movement and civil rights movement. If you look at America today, the only one of these conditions that prevails is the first.
to tl;dr bottom line this, i guess what i'm left/stuck with (or struck by) is that with 'secular stagnation' the only condition that obtains so far -- in the absence of 'genuine immiseration' (for white folks) and a 'labor movement' -- concerns about economic inequality will continue to linger, per mccall's observation, to the extent that "their own and their children’s economic opportunities" are limited. but if it's true that getting out of secular stagnation means disrupting the present cartel, then for the (neoliberal) powers that be, secular stagnation remains the best possible situation for them as long as they can hold the growing ranks of 'radical' populism -- on the left and right -- at bay. on the right it looks like establishment conservatives' efforts to placate the base are failing, which makes clinton their best bet? anyway, for progressives, i like how reich is trying to reframe the debate to bring in disaffected conservatives around the language of predistribution -- as a rallying cry! -- to save the republic, or in other words, go canada :P
posted by kliuless at 11:24 AM on December 24, 2015 [1 favorite]


not on (taxing) global wealth inequality per se, but re: 'spoonfuls of sugar'
  1. [Americans] have been receptive to proposals that would widen economic opportunity.
  2. [A]ppeals for government to reduce inequality have to be related to objectives that benefit all, or almost all, Americans.
  3. [T]he proposals themselves cannot be so ambitious that they raise fears about higher taxes and greater spending.
"Washington State should tax carbon - then give the money back."* (same thing for a land value tax ;) and then regulate the financial system -- to target 'wealth, or permanent income, [which] drives aggregate demand'? -- sensibly! larry summers :P 'It's worth pondering how policy would be different if special interests were kept in check. Here are my top five':
  • First, the financial regulatory agencies would be adequately resourced and would not be under pressure to kowtow to legislators pushing their contributors interest. The Commodity Futures Trading Commission head Tim Massad had it right when he condemned the recent budget agreement as undercutting the ability to regulate derivatives in a serious way.
  • Second, the Balkanised character of US banking regulation is indefensible and would be ended. The worst regulatory idea of the 20th-century — the dual banking system — persists into the 21st. The idea is that we have two systems: one regulated by the states and the Fed and the other regulated by the Office of the Comptroller of the Currency, so banks have choice. With ambitious regulators eager to expand their reach, the inevitable result is a race to the bottom.
  • Third, the current SEC and CFTC would be combined and charged with regulating in a coherent way all financial markets with respect to market integrity, manipulation issues, insider trading, transparency, fairness of execution, and systemic risk. When there were securities markets and commodity markets it may have made sense. It no longer is defensible when the vast majority of “commodity trading” is in financial derivatives. The current system persists only so that multiple congressional committees can maintain jurisdiction over financial regulation and reap the benefits in terms of campaign contributions. Quite possibly, it would be a good idea to give the new agency, if it was strong, jurisdiction over fiduciary rules for investment and pension advisors.
  • Fourth, either the new agency formed out of the SEC and CFTC or the existing Financial Stability Oversight Council would take on systemic risks associated with asset management in a serious way. While the asset managers have the better side of the argument when they claim not to be systemic in the sense of JPMorgan or Goldman Sachs, their activities are systemic and egregiously under-regulated. It took far far too long to reach a still unsatisfactory solution with respect to money market funds. And ETFs are as likely as anything else to be the source of the next major bit of financial drama.
  • Fifth, there would be appropriate taxation of financial activities and the financial sector. Among the obvious reforms held back only by special interests are the highly preferential treatment of carried interest, the privileged treatment of dividends and capital gains, the ability of financial institutions to reduce their tax liabilities by using off shore tax havens and the tax deductibility of huge fines paid to resolve allegations of wrongdoing.
also btw!
For the Wealthiest, a Private Tax System That Saves Them Billions - "The very richest are able to quietly shape tax policy that will allow them to shield billions in income."
posted by kliuless at 11:42 AM on December 31, 2015 [1 favorite]


-Piketty on Piketty at Crooked Timber.*
posted by kliuless at 11:14 PM on January 4, 2016


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