Income inequality: hey, let’s take away most of the money of the rich
Yes indeed, that’ll fix it, according to French economist Thomas Piketty:
Piketty’s terror at rising inequality is an important data point for the reader. It has perhaps influenced his judgment and his tendentious reading of his own evidence. It could also explain why the book has been greeted with such erotic intensity….
It’s no surprise that the idea of levying enormously high taxes on rich people’s money has had rising support in this era of proudly unearned self-esteem and entitlement, as well as decline in the power of religious prohibitions such as the commandment against covetousness.
More at the WSJ:
While America’s corporate executives are his special béªte noire, Mr. Piketty is also deeply troubled by the tens of millions of working people – a group he disparagingly calls “petits rentiers – whose income puts them nowhere near the “one percent” but who still have savings, retirement accounts and other assets. That this very large demographic group will get larger, grow wealthier and pass on assets via inheritance is “a fairly disturbing form of inequality.” He laments that it is difficult to “correct” because it involves a broad segment of the population, not a small elite that is easily demonized.
Oh, but it can be done. Where there’s a will, there’s a way. Piketty need only take lessons from Stalin re the kulaks, and from Pol Pot re—well, re just about everybody.
This is what Piketty proposes as a remedy for the terrible problem of income inequality [emphasis mine]:
Mr. Piketty urges an 80% tax rate on incomes starting at “$500,000 or $1 million.” This is not to raise money for education or to increase unemployment benefits. Quite the contrary, he does not expect such a tax to bring in much revenue, because its purpose is simply “to put an end to such incomes.” It will also be necessary to impose a 50%-60% tax rate on incomes as low as $200,000 to develop “the meager US social state.”
In case you’re wondering, Piketty’s book has been hailed almost universally on the left—and by “left” I mean almost everyone except the right.
They have turned to “income inequality” as the big bad issue because the actual plight of the poor in objective terms can’t be the point any more, since the poor are doing a lot better than they used to be in terms of their standard of living in most first world countries. In fact:
…[T]he last few centuries have seen us banish starvation and famine from a large part of the Earth. In the most successful countries, the average citizen now enjoys a material standard of living that would have made the greatest king of two hundred years ago turn green with envy…
To see how much more an American worker can buy today, compare the number of hours he would have had to work to obtain various items in 1895 versus 2000 (Table 1). Whereas a one-hundred-piece china set would have taken 44 hours of labor income in 1895, a twenty-first-century American would need to work 3.6 hours or less for it. The numbers are 28 versus 6 hours, respectively, for a gold locket; and 260 versus 7.2 hours for a one-speed bicycle (taken from De Long 2000, based on prices in the 1895 Montgomery Ward catalog). Comparing the prices charged in the Montgomery Ward catalog with prices today””both expressed as a multiple of the average hourly wage””provides an index of how much our productivity in making the goods consumed back in 1895 has multiplied…
As all this was going on, expectations and demands have risen, and so income inequality has been the new buzzword. Stamp it out, because it somehow “offends democracy.” The fact that the remedy Piketty and many others propose offends liberty, and the strong possibility that it could end up killing the goose that laid the golden egg, are both ignored and/or minimized in the rush to social and economic “justice”—that is, equality of outcome rather than opportunity.
I’ll let the inimitable Margaret Thatcher have the last word here (the following clip is from 1990):
[NOTE: For more on income inequality, see this, this, as well as this on the question of how big a problem income inequality really is in the first place.].]
Hollywood still get tax exemption?
That clip of Lady Thatcher’s last speech in Parliament never ceases to warm the cockles of my heart.
God, we could use a leader like her now.
Why stop at $500K or even $200K? The median income in the US is about $50K. Why not use that as the upper limit to show solidarity with the working classes? As a show of good faith let’s have every academic economist in the country in favor of this send a check to the Treasury for 90% of his income over $50K from any source whatsoever including benefits and tax free bonds.
I’m waiting…
carl in atlanta:
And she accomplishes it with such evident delight, too.
Keen intelligence coupled with zest!
No wonder they hated her.
Piketty’s prescription simply replaces income inequality with political inequality. Let us assume that Mr. Monopoly is rich as heck and therefore oppresses Bob the Builder. So the solution is to empower Bill the Bureaucrat to oppress Mr. Monopoly in turn? I fail to see this as an improvement.
As others have noticed, those who say, “I do think at a certain point you’ve made enough money,” such as our POTUS, do not also say, “I do think at a certain point you’ve acquired enough power.” On the contrary, the POTUS and his lib friends are continually seeking to acquire more power.
After all, those who make money are selfish goons, and those who want to acquire more power are doing it FOR US. Thank you very much.
Taking the wealth of the rich was a great success in the USSR. Everybody was equally poor except the politicians, of course. That was why the politicians had such a difficult time convincing the workers this was paradise.
From that linked WSJ article:
I find it startling that only 25 years after the collapse of the Soviet system that intelligent people who’ve been around for a while are admiring of someone who invokes the Soviet system in anything other than a condemnatory manner. And who actually uses the term “less violent” when describing his own solutions.
Ann says, “I find it startling that only 25 years after the collapse of the Soviet system that intelligent people who’ve been around for a while are admiring of someone who invokes the Soviet system in anything other than a condemnatory manner. And who actually uses the term “less violent” when describing his own solutions.”
I question the ‘intelligence’ of Piketty and his fellow travelers who spout this poppycock. All Piketty needs to do is go on a long term fact finding mission to Cuba. As far as “less violent” is concerned, I doubt Piketty would be squeamish about extreme violence directed at the right sort of people as long as he doesn’t have to get his hands bloody.
I too agree that it is always a treat to listen to Lady Thatcher adroitly reverse the tables on a socialist.
My older siblings and I spent our early years in a home without indoor plumbing and very limited electricity. Two of my brothers earned their MBA’s and retired very comfortably. Another brother was an F-4 pilot. The capitalistic system is the best solution for income inequality that has ever existed. All it requires is a little self discipline and some hard work.
I have to start by saying I haven’t yet read piketty’s book. But from reading the reviews, it seems to me that the book’s popularity is almost completely political. The enthusiasm is only slightly more respectable than support for the Occupy Wall Street people, and the motives are much the same.
As for the economic data and arguments, several good eonomists have written very critical reviews. See, for example, Tyler Cowen’s skeptical remarks at “Foreign Affairs.” (http://www.foreignaffairs.com/articles/141218/tyler-cowen/capital-punishment)
Here’s one good paragraph:
Piketty fails to grapple with the actual history of the kind of wealth tax he supports, a subject that has been studied in great detail by the economist Barry Eichengreen, among others. Historically, such taxes have been implemented slowly, with a high level of political opposition, and with only modestly successful results in terms of generating revenue, since potentially taxable resources are often stashed in offshore havens or disguised in shell companies and trusts. And when governments have imposed significant wealth taxes quickly — as opposed to, say, the slow evolution of local, consent-based property taxes — those policies have been accompanied by crumbling economies and political instability.
Where can I get a 100 piece china set for only 3.6 hours of work?
Lurch, nobody said it’d be good china.
Well, as they used to say in the old Soviet Union, “Under capitalism, man exploits man. Under communism, it’s completely the opposite!”
Folks, Piketty lives and dreams in PARIS.
France is run by Enarques.
He has NO LARGER VISION.
He is speaking to France.
That his bile is being re-propped here in America….
We’ve got dumbed down elites.
I give you Barry.
Lurch, I saw some good stuff at the flea market – guy was selling it out of his trunk. I would hook you up, but they were selling pretty fast.
Redistributive change is a left-wing method for a minority to consolidate capital and control to manage a population. It is correctly described as monopoly formation through authority in a fascist, communist, socialist, etc. regime When we had a functional government, formation of monopolies or monopolistic behaviors were censured. That good governance failed when the government violated the laws set forth to limit its predisposition to corruption and abuse of status, often in with a justification of “good intentions”.
One cause of structural inequality is saturation in a high-density population center. Democrats have identified this problem and exploit it for their interests; but, they are unwilling to subsidize the source of their power. This is why Obama waited until he reached national office to pass health care “reform”. He needed a platform to capture national wealth, and exploit the seemingly limitless leverage of sovereign debt.
Yeah, income inequality exists, but it is not the real problem. The real problem is progressive cost of living; unmeasured and illegal immigration; unfair “free” trade; foreign defense costs; an extremely expensive education system with marginal or inconsistent returns; an increasingly deprecated population; progressive morality; and, of course, abortion/murder of over 1 million Americans annually.
Democrats are fundamentally corrupt. Their tactics which denigrate individual dignity (e.g. “diversity”), devalue human life (e.g. abortion/murder or pro-choice), obfuscate and ignore causes in favor of treating symptoms (e.g. welfare), etc. are evidence that their response to real problems is not out of good will, but out of necessity, and opportunistic glee.
The Republicans are exceptionally corrupt, and often their interests overlap or converge with their Democrat counterparts, rendering the two parties indistinguishable, if not in principle, then certainly in practice.
Anyway, if Americans want to recover their country, then they will have to address problems which are often not of their own making, but are nonetheless a problem for our nation and the general Welfare. For example, illegal immigration needs to be addressed. The causes which motivate mass emigration (over 1 million annually) need to be exposed and confronted. This is an international problem which originates in the aliens’ homes. Even more poignant, is the need to address a general devaluation of human life, and an unprecedented human rights violation, committed, not by individual abortionists/murderers, but the normalization (e.g. state sponsored) of abortion/murder of 1 million Americans annually, justified by a pseudo-scientific myth of spontaneous conception.
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