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Thomas Piketty, a French economist, wrote a book last year called Le capital au XXIe siècle, and the English version — Capital in the Twenty-First Century — was published in March. The book's been getting a bunch of attention, not just from economists but from people of every political stripe around the globe. In a nutshell, Piketty argues that capitalism inevitably drives up inequality drastically so that inherited wealth (what he calls "patrimonial capital") will vastly outstrip earned income like wages and salaries, plunging the world back into a nineteenth-century style Gilded Age. Essentially, Piketty sees the great levelling out of wealth that developed countries saw from the postwar period until the 80s as a lucky coincidence that happened to briefly stall this long-term trend of compounding inequality. I am going to set out Piketty's argument briefly, and then throw out some ideas and comments which hopefully can serve as branching-off points for discussion. If there are other things in the book you'd like to tackle, by all means introduce them and let's have at it. The book is unusual and pioneering in a number of respects. First, there are a whole lot of similarities to Marx: it's written from a historical and social perspective (Piketty calls his field 'social science' rather than 'economics'), thinks there is a fundamental difference between capital and labour, and is even called "Le Capital". Second, it's one of the few times in recent memory that a 'mainstream' economist refers to the capital/labour divide so openly, and so boldly states that capitalism will inherently cause massive levels of inequality; even the more liberal economists like Krugman tend to be more sanguine about possible futures of a capitalist society. Third, it actually comes with some decent policy goals to fix the problems it identifies. Piketty's main argument is summarised in the introduction: "When the rate of return on capital exceeds the rate of growth of output and income, as it did in the nineteenth century and seems quite likely to do again in the twenty-first, capitalism automatically generates arbitrary and unsustainable inequalities that radically undermine the meritocratic values on which democratic societies are based". Formally, it goes like this:
Krugman, writing for the New York Review of Books, puts it like this: Paul Krugman posted:It’s all about r versus g—the rate of return on capital versus the rate of economic growth. Piketty's solution is to effectively reduce R, by imposing a global wealth tax. If capital always attracts a 4–5% return, then imposing an wealth tax of say 2% effectively reduces the R to 2–3%. This hopefully brings R below or in line with g, which reduces or reverses the inequality-widening effect Piketty says is inbuilt into capitalism. Predictably, reaction to this has been outrage (from the right) and "theoretically nice but politically impossible" (from the liberal left). Watching Forbes frantically try to discredit the argument is especially funny. Something else that is interesting, and could be worth discussing, is Matt Yglesias's point over at garish-yellow Vox. He says that if the goal is to reduce R, there are plenty of other ways to do that than a global wealth tax: reducing the value of patents through looser IP regulations, for example, or a property tax. (One could even literally smear poo poo all over houses to help lower the value of capital.) Another approach could be to forget about sabotaging the return on capital, but to change how the return of capital is distributed, or to change the distribution of the capital itself — the inequality-increasing effect of R > g only happens because the rich already own a unequal share of capital. Krugman also points out another limitation of Piketty's: he argues that Piketty's analysis might not stack up so well in the US, where the real inequalities seem to be betweeen the salaried and the supersalaried (for example, hedge fund managers), rather than between labour and capital. This could be a fair criticism, but I think there are two points to be made against it. First, it seems unlikely that these supersalaries can actually continue indefinitely: the skyrocketing pays of CEOs and financiers looks more like a bubble than a decision of true economic merit. But second, ultimately it's a distinction without a difference: the supersalaried, having made off with their salary, can now transform it into a hefty chunk of capital which will be just as inequality-creating over the long run as every other type of capital. Finally, for those of you who are interested, Picketty is presenting a lecture which will be livestreamed at 6 p.m. EST tonight here, with Krugman and Stiglitz commenting.
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# ? Apr 16, 2014 21:07 |
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# ? Apr 19, 2024 13:26 |
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So pumped for this thread. I still need to read the book but it's at the top of my list. When you say change the distribution of capital, what would be ways of doing that apart from forcing companies to sell stock to small investors? Also, would anyone mind recording the livestream?
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# ? Apr 16, 2014 21:14 |
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Badger of Basra posted:So pumped for this thread. I still need to read the book but it's at the top of my list. When you say change the distribution of capital, what would be ways of doing that apart from forcing companies to sell stock to small investors? Comedy option: eat the rich.
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# ? Apr 16, 2014 21:52 |
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I think you're mischaracterizing Krugman's point about finance slightly. Piketty talks about the supersalaried being mainly C level execs that have the ability to set pay norms for their class. Krugman disagrees pointing to hedge fund managers, traders with earnings coupled to their PnL. Heck, it's not unusual for traders in investment banks to make more than their CEOs.
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# ? Apr 16, 2014 21:59 |
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Badger of Basra posted:So pumped for this thread. I still need to read the book but it's at the top of my list. When you say change the distribution of capital, what would be ways of doing that apart from forcing companies to sell stock to small investors? Changing the distribution of capital is socialism. That's literally the definition of socialism. It can be done in a bunch of ways. Having everyone own stock and being a small investor is one way, having all companies be owned by their workers is another. A centrally planned economy tries to get out of that by assigning capital in a way that does not accumulate in fewer hands.
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# ? Apr 16, 2014 22:01 |
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shrike82 posted:I think you're mischaracterizing Krugman's point about finance slightly. Piketty talks about the supersalaried being mainly C level execs that have the ability to set pay norms for their class. Krugman disagrees pointing to hedge fund managers, traders with earnings coupled to their PnL. Heck, it's not unusual for traders in investment banks to make more than their CEOs.
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# ? Apr 16, 2014 22:03 |
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The other thing that should be highlighted for those unfamiliar with Piketty and the book is that he is skeptical of a socialist solution/Marxism to this and his prescription for fixing the wealth distribution issue is pretty feeble - a global wealth tax.
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# ? Apr 16, 2014 22:11 |
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A global wealth tax is ludicrous fairy-thinking because there will always be sovereign states or zones who benefit from offering low or non existent taxes on businesses or wealthy individuals.
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# ? Apr 16, 2014 22:15 |
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Lancelot posted:Piketty's solution is to effectively reduce R, by imposing a global wealth tax. If capital always attracts a 4–5% return, then imposing an wealth tax of say 2% effectively reduces the R to 2–3%. This hopefully brings R below or in line with g, which reduces or reverses the inequality-widening effect Piketty says is inbuilt into capitalism. So his solution is to somehow create a global tax collection agency that will somehow squeeze blood from the stone that are the greedy fucks that created the problem in the first place. If we're going for apparent pie in the sky solutions how is socialism not better in every way.
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# ? Apr 16, 2014 22:24 |
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Ian Winthorpe III posted:A global wealth tax is ludicrous fairy-thinking because there will always be sovereign states or zones who benefit from offering low or non existent taxes on businesses or wealthy individuals. Isn't that how it goes? It is always harder to find a solution than to acknowledge its necessity. Yeah, I don't see a wealth tax working without a not only a global tax authority but one with heavy policing powers. I mean you might literally need squads of investigators to go out and dig up barrels of gold and cash hidden in far off islands.
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# ? Apr 16, 2014 22:27 |
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Haha, the notion of wealth being locked up in barrels of gold seems incredibly quaint.
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# ? Apr 16, 2014 22:29 |
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I don't think it's as hard as all that. For one thing, when FATCA comes online, the US will be able to pretty readily assess the total wealth of all of its citizens, so absent actually relocating yourself to the Caymans and cutting off all ties with US-linked institutions, you can be caught by the tax. As for multinational cooperation, Piketty suggests the EU as a good first place to get a wealth tax off the ground. Unfortunately EU law requires all 28 member states to be unanimous in agreeing to a tax law for it to be passed, and I imagine Switzerland wouldn't be too happy to agree. Still, if there was enough political pressure, I imagine it would capitulate. I mean, no one ever thought the IRS would be able to get the Swiss government to override banking secrecy, but they did.
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# ? Apr 16, 2014 22:35 |
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shrike82 posted:Haha, the notion of wealth being locked up in barrels of gold seems incredibly quaint. Well there's got to be material wealth somewhere right? London for instance is a major financial centre but however much people want to talk about the billions of billions that drive it's economy, they're just numbers on a screen representing actual material wealth, most of which doesn't exist in London.
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# ? Apr 16, 2014 22:35 |
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edit:never mind
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# ? Apr 16, 2014 22:38 |
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Lancelot posted:Unfortunately EU law requires all 28 member states to be unanimous in agreeing to a tax law for it to be passed, and I imagine Switzerland wouldn't be too happy to agree. They're not an EU member?
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# ? Apr 16, 2014 22:39 |
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Barbe Rouge posted:They're not an EU member? Not to mention the UK who would refuse to do anything to compromise London's current position as finance capital and refuge of the world's oligarchs.
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# ? Apr 16, 2014 22:42 |
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Barbe Rouge posted:They're not an EU member?
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# ? Apr 16, 2014 22:47 |
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Ian Winthorpe III posted:Well there's got to be material wealth somewhere right? London for instance is a major financial centre but however much people want to talk about the billions of billions that drive it's economy, they're just numbers on a screen representing actual material wealth, most of which doesn't exist in London. No, most of those numbers do not resist any form of material wealth. Furthermore all the precious metals and jewels and expensive art in the world would not add up to much value compared to the wealth the rich hold, and things like land and infrastructure can't be packed in a bag and taken to the Cayman Islands.
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# ? Apr 16, 2014 22:50 |
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Livestream's up now: http://www.gc.cuny.edu/piketty-livestream
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# ? Apr 16, 2014 23:07 |
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Ian Winthorpe III posted:Not to mention the UK who would refuse to do anything to compromise London's current position as finance capital and refuge of the world's oligarchs. The EU literally just passed a whole load of new banking regulations over British objections.
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# ? Apr 16, 2014 23:18 |
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So what's stopping us from sending g to 0 and making everyone a capitalist via 3D printing and something like the global village construction set? E: I mean, eventually, can't poor people who can't make it anywhere else just move out to the mid-west and live easy lives in literal brick shithouses? EB Nulshit fucked around with this message at 23:21 on Apr 16, 2014 |
# ? Apr 16, 2014 23:19 |
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EB Nulshit posted:So what's stopping us from sending g to 0 and making everyone a capitalist via 3D printing and something like the global village construction set? The facts that: 1) You still need to get the resources to put into your machines 2) It's wildly impractical and time consuming to do a lot of things in those methods versus actual factories, including often being much more environmentally damaging in total.
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# ? Apr 16, 2014 23:21 |
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EB Nulshit posted:So what's stopping us from sending g to 0 and making everyone a capitalist via 3D printing and something like the global village construction set? You mean other than that idea being the dumbest thing I've ever heard? How the gently caress is every person going to learn, own and operate a laser cutter or induction furnace.
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# ? Apr 16, 2014 23:23 |
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Install Windows posted:The facts that: 1) Use your machines to get the resources to put into your machines; use solar-powered machines 2) This is now your job because you were just replaced by a burger-flipping robot. You have plenty of time for time-consuming things, and there are probably 3D-printable tools to assist you, if not completely automate the process for you. Raskolnikov38 posted:You mean other than that idea being the dumbest thing I've ever heard? How the gently caress is every person going to learn, own and operate a laser cutter or induction furnace. Basic tools are the first step. By the time it gets to this point, people will be able to 3D-print a robot or something to operate the laser cutter and induction furnace.
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# ? Apr 16, 2014 23:27 |
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EB Nulshit posted:1) Use your machines to get the resources to put into your machines; use solar-powered machines Are you really not aware that most resources are not globally available? You can't just point a machine at the ground anywhere and get copper and molybdenum. EB Nulshit posted:2) This is now your job because you were just replaced by a burger-flipping robot. You have plenty of time for time-consuming things, and there are probably 3D-printable tools to assist you, if not completely automate the process for you. Except there'd be no reason for you to have these things at that point. Why would that even be your job, you don't need produce things most of the time, meanwhile you do need food/
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# ? Apr 16, 2014 23:30 |
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Presumably, you are a human being, with friends, so you know someone who already has these things at that point. It's like moving back in with your parents after university, except your parents live in a house made out of bricks made of out human excrement. E: And you're not moving in with your parents. You're moving in with your crazy survivalist neighbour who has been stockpiling guns and canned food just in case zombies.
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# ? Apr 16, 2014 23:32 |
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EB Nulshit posted:Presumably, you are a human being, with friends, so you know someone who already has these things at that point. So you just know the miner from 2000 miles away with the metals you need or what? And where's everyone storing their stockpiles of necessary materials?
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# ? Apr 16, 2014 23:35 |
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Why do you need metals? 3D-print stuff out of those little plastic beads. E: And you can order complicated stuff from Amazon. This isn't some post-apocalyptic dystopia where technology is gone and people are fighting over gasoline. Companies still exist. You can just eliminate basically all your costs, mostly.
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# ? Apr 16, 2014 23:36 |
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EB Nulshit posted:Why do you need metals? 3D-print stuff out of those little plastic beads. Plastic doesn't conduct electricity. very well, often at all. This is a major problem if you need to make anything electronic. EB Nulshit posted:You can just eliminate basically all your costs, mostly. There are about no costs the average person could eliminate with a 3D printer, even if they had a magically replenishing free supply of printing medium. It's not going to make you food, it's not going to generate power, it's not going to get you a new TV if yours breaks, etc.
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# ? Apr 16, 2014 23:38 |
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Order it from Amazon or ebay. 2000 miles away is a miner with the materials you need, who has automated its extraction. 2000 miles away from that miner is someone who knows how to make it into the magic metal thing that makes your robots go. Buy it from that person's ebay store.
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# ? Apr 16, 2014 23:40 |
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EB Nulshit posted:Order it from Amazon or ebay. So then why the gently caress are we having the local production stuff then? Why not just buy that stuff to begin with? You're really not making sense. It's not like you need inert lumps of material often! Edit: Tell me, what things do you think people will be creating all the time with these things, and why would they need them? Nintendo Kid fucked around with this message at 23:46 on Apr 16, 2014 |
# ? Apr 16, 2014 23:41 |
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Install Windows posted:So then why the gently caress are we having the local production stuff then? Why not just buy that stuff to begin with? Because labor is still necessary. You're just finding whatever niche you can get into - in this case, midwestern shithouses - and finding a way to construct robot slaves for that niche and then living of their labor. Something like the GVCS, combined with 3D printing, is the starting point. Something you can use to get yourself to the goal of :cylon: ROBOT SLAVES :cylon: even if you don't have an entire factory to devote to it. Install Windows posted:Edit: Tell me, what things do you think people will be creating all the time with these things, and why would they need them? The same things they do now - except indirectly, through robots, and they would need them because already those are needed.
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# ? Apr 16, 2014 23:49 |
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EB Nulshit posted:Because labor is still necessary. You're just finding whatever niche you can get into - in this case, midwestern shithouses - and finding a way to construct robot slaves for that niche and then living of their labor. How are you constructing robot slaves? How are you going to live off of them when everyone has supposedly equal ability to build them? Why does everyone need to build these, why wouldn't you just have one or two people build what needs building? Essentially what you propose makes no sense. Especially since people don't build random things most of the time.
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# ? Apr 16, 2014 23:53 |
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So to abolish capitalism we have to give all our money to capitalists for tools and then give them more money so we can use those tools to make tools (or as you've said, houses made out of shitbricks). This sounds like a great plan
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# ? Apr 16, 2014 23:55 |
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Imagine you have four robots on the edge of a cliff... Labor works the same way.
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# ? Apr 16, 2014 23:55 |
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Magical Star Trek socialist future fantasies aside, the stream is really interest. Stiglitz is a terrible speaker though.
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# ? Apr 16, 2014 23:56 |
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Lancelot posted:Predictably, reaction to this has been outrage (from the right) and "theoretically nice but politically impossible" (from the liberal left). Watching Forbes frantically try to discredit the argument is especially funny. I'm actually surprised that the official talking point wasn't "What's so bad about inequality, anyway? We can't all be equal stupid libs ". Yeah, I'm sure someone is saying it and the first reply to my post will probably be a link to that, but I'm still surprised it wasn't the main reaction.
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# ? Apr 17, 2014 00:06 |
Lancelot posted:Magical Star Trek socialist future fantasies aside, the stream is really interest. Stiglitz is a terrible speaker though. He and Krugman are both terrible speaking in front of a crowd, I really don't get how you can be a public figure and be so bad at public speeches.
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# ? Apr 17, 2014 00:10 |
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Lancelot posted:Magical Star Trek socialist future fantasies aside, the stream is really interest. Stiglitz is a terrible speaker though. From the hearsay I've encountered in the academic circles, he's pretty much ushered around the world by a team of (female) secretaries not knowing exactly where he's going or exactly what he'll be doing there. He picks stuff up very quickly during meetings, though. He's like a quasi-paymaster for the team I'm working with, actually. The man is pretty much jetlag, old age and coffee's offspring given form. Krugman is just a sperg from what I gather. Any idea of whether this stream is being recorded? Really interesting to send to the people I'm working with. I have a feeling I might have to review the tome a bit for work, actually.
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# ? Apr 17, 2014 00:11 |
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# ? Apr 19, 2024 13:26 |
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why are you guys responding to the guy who thinks minecraft IRL is the solution to the world's problems
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# ? Apr 17, 2014 00:11 |