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Dystram posted:That depends entirely on your definition of crisis and your definition of inequality. It also depends on the definition of "on its own" and "high."
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Apr 28, 2014 19:25
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asdf32 posted:For reference, it's that inequality on its own isn't going to cause an economic crisis. The economy has, can and will continue to operate with high levels of inequality. Two questions. First. Assume your statement is true. Further expand it: the economy will continue to operate with ever higher levels of inequality. Is there not a level of inequality so massive that the point is moot? An inequality so great where we simply stop caring whether the economy operates properly or not? Society does interrupt the efficient allocation of resources when it deems it necessary. Sale of organs, prostitution, "voluntary" slavery and so on. Second. The economy has, can and may continue to operate with low levels of inequality. If I were to give you an "inequality dial" promising that nudging wouldn't wreck the economy, wouldn't you nudge it towards slightly more equal allocation of goods?
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Apr 28, 2014 22:17
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MickeyFinn posted:The rich do not spend as much of their cash on hand as poorer people. And savings is not a substitute for consumption in a demand depressed economy (see the Krugman for that). I'm curious about the last point - like, the details of it (and this is just general econ ignorance). Higher inequality should indeed mean less savings and more savings/investments. But those savings can't just sit there in cash least inflation chips them away to nothing - they have to sit in some form of productive investments, which ultimately means someone is actually spending that money. Like, all that rich-person-saved-up-money has to end up as someone's IPO or loan or mortgage or something, which means actual real spending on new PPnE, supplies, salaries etc. So why exactly isn't 100% of savings showing up as this? Is it that actually rich people do prefer to keep a small (but still significant) portion of their wealth in fully liquid cash which is just getting eroded by inflation (presumably this is made up with their other investments)? Is it just that the transmission mechanism from deposit into savings account / personal estate fund to actual new investment purchases is lengthy and you get the same sort of wasteful supply-chain effect you see with manufacturing before just-in-time-inventory was a thing? I.e. a lot of money just spending too much time being held from bank to bank, investor to investor. What exactly am I missing here?
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Apr 28, 2014 23:04
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Mr. Wynand posted:But those savings can't just sit there in cash least inflation chips them away to nothing ... A lot of it actually sits there as cash That's actually a very good point you make. And it's basically Say's law. Money exists, "investment" is just a different kind of spending. Production creates its own demand. The Keynesian/Hicksian answer was liquidity preference. People in volatile situations want to hold on to cash. And holding cash generates nothing. CarrKnight fucked around with this message at 23:23 on Apr 28, 2014 |
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Apr 28, 2014 23:21
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Mr. Wynand posted:I'm curious about the last point - like, the details of it (and this is just general econ ignorance). Higher inequality should indeed mean less savings and more savings/investments. But those savings can't just sit there in cash least inflation chips them away to nothing - they have to sit in some form of productive investments, which ultimately means someone is actually spending that money. Like, all that rich-person-saved-up-money has to end up as someone's IPO or loan or mortgage or something, which means actual real spending on new PPnE, supplies, salaries etc. So why exactly isn't 100% of savings showing up as this? Is it that actually rich people do prefer to keep a small (but still significant) portion of their wealth in fully liquid cash which is just getting eroded by inflation (presumably this is made up with their other investments)? Is it just that the transmission mechanism from deposit into savings account / personal estate fund to actual new investment purchases is lengthy and you get the same sort of wasteful supply-chain effect you see with manufacturing before just-in-time-inventory was a thing? I.e. a lot of money just spending too much time being held from bank to bank, investor to investor. What exactly am I missing here? This appears to answer all of your questions. To be sure, I'm an amateur at this, but when I asked similar questions of myself that linked article satisfied me enough. MickeyFinn fucked around with this message at 23:37 on Apr 28, 2014 |
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Apr 28, 2014 23:21
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Grand Theft Autobot posted:Piketty thinks he should have included the contemporary studies of the value of total wealth in Britain, and that his survey of industry is not diverse enough in its selection of sectors. How does Piketty pull off such a claim without demanding that Marx meet an impossible standard?
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Apr 29, 2014 01:08
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He's not demanding that Marx meet impossible standards, simply stating that Marx's work did not and could not go far enough considering the circumstances of mid-19th century scholarship.
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Apr 29, 2014 01:18
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CarrKnight posted:Two questions. I personally agree that lower inequality is a good thing although I don't think it's a primary goal. The more important thing is standard of living of the average person. And there is reason to think inequality is going to accompany growth. This is particularly applicable to developing economies. I couldn't give a poo poo less if someone is getting unjustly rich in China for example as part of a process that pulls millions out of poverty. Yep there are a ton of ways we could increase equality while maintaining capitalism. I think the right far oversells the impact of tax rates on growth for example. Progressive taxes are primarily a transfer of wealth, and consistent with the other arguments I've made here, wealth transfers are generally growth neutral. Though at really high levels taxes do impact incentives to produce.
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Apr 29, 2014 01:23
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Install Windows posted:He's not demanding that Marx meet impossible standards, simply stating that Marx's work did not and could not go far enough considering the circumstances of mid-19th century scholarship. So he doesn't actually prove that Marx's scholarship is inadequate?
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Apr 29, 2014 01:23
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Real hurthling! posted:So he doesn't actually prove that Marx's scholarship is inadequate? He only says that it's inadequate in comparison to modern scholarship which has far more access to information than Marx could possibly have had - which is objectively true. I don't see why this offends you so much.
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Apr 29, 2014 01:24
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Install Windows posted:He only says that it's inadequate in comparison to modern scholarship which has far more access to information than Marx could possibly have had - which is objectively true. I don't see why this offends you so much. Yeah, I mean you just have to look at Marx's views on Asian cultures to get that pretty easily.
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Apr 29, 2014 01:25
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My favorite part of Marx's scholarship was the Asiatic mode of production part, because it was based on incredibly sketchy evidence that's almost certain orientalist. And by Asiatic he basically meant "what 19th century Europeans think China has always looked like" and then went on to cherry-pick a whole bunch of examples over the course of like 2500 years to fit his conclusion that you can lump together the economic structure of every society east of the Euphrates into one label because they are pretty much the same thing. It's basically something that there is no way it could stand serious scrutiny today and countless people have called him on it since its publication. Typo fucked around with this message at 08:00 on Apr 29, 2014 |
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Apr 29, 2014 01:29
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Real hurthling! posted:So he doesn't actually prove that Marx's scholarship is inadequate? What constitutes inadequate is pretty subjective and I suspect if you are a Marxist then it's never inadequate
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Apr 29, 2014 01:32
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OwlBot 2000 posted:I think he means that America's current positive GDP growth in spite of higher inequality and depressed aggregate demand, proves that inequality will never reach a level that produces prolonged demand slump and/or overproduction crisis. A demand slump doesn't necessarily mean that the economy is in actual recession (i.e. declining GDP), it can also show up as a gap between potential output and actual output. What that means is that GDP can be growing, but at a very sluggish rate compared to long-term trends. That means that the economy remains below what it's capable of producing. The output gap represents real losses to the economy from idle resources and inadequate demand. That's the situation we're in now:  CarrKnight posted:That's actually a very good point you make. And it's basically Say's law. Money exists, "investment" is just a different kind of spending. Production creates its own demand. Say's Law doesn't hold since markets don't always clear. Sticky prices and excess demand for safe financial assets like cash and Treasuries can produce an equilibrium where the economy remains mired in slow growth indefinitely.
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Apr 29, 2014 01:33
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asdf32 posted:And there is reason to think inequality is going to accompany growth Also, qualify it a little. Are you talking about growth in some remote parts of Angola? Or Peoria? quote:Say's Law doesn't hold since markets don't always clear.
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Apr 29, 2014 02:12
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Doesn't our GDP growth get pegged with stock growth, as it is currently measured?
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Apr 29, 2014 03:12
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Job Truniht posted:Doesn't our GDP growth get pegged with stock growth, as it is currently measured? Not at all. 
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Apr 29, 2014 03:15
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CarrKnight posted:Sure, sure. That was my point. Ah, okay, I misread you.
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Apr 29, 2014 03:49
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Typo posted:What constitutes inadequate is pretty subjective and I suspect if you are a Marxist then it's never inadequate The danger here is that claims like this about Marx go unchallenged simply because it is a basic and stubborn premise of modern, serious economics that Marx is a crank that nobody needs to read. My gut reaction to hearing this sort of thing is that the author sees better fortunes for his work if he distances himself from the controversial source of his own best ideas. I'm no great advocate or student of Marx myself, but i'm familiar with the way liberals use and disabuse themselves of Marxist ideas for their own ends. I suppose I'll have to read the book since my incredulity is apparently brewing up some hostility and that was not my intention.
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Apr 29, 2014 04:09
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I just finished the introduction. First I will touch on the Marx bit and then go onto more interesting parts of the chapter. It is clear Piketty is not a Marxist nor is he necessarily overtly critical of Marx's theory. He calls Marx (and Ricardo) the two most influential economists of the eigtenteeth century. His issue with Marx is his prediction of Capitalism collapsing within itself felt short sighted and his prescription for communist society incomplete. quote:
He goes on to praise Marx for trying to answer a question of social importance and his theory of capital accumulation. The end. I feel his discussion of Kuznets is more interesting. As stated earlier, Kuznets collected income data in the US from 1910 to 1950. He saw a dramatic reduction in income inequality and extrapolated that capitalist countries become more equal over time. Capitalism thus would rise all boats in the tide of capitalist growth. The theory turned out to be based on myopic data and much of Piketty's work is continuing Kuznet's data to the 21st century to draw conclusions about income as it relates to capitalist economies. These conclusions have been covered in much more eloquent means than my own, but.. The decline in economic inequality is due to shocks in our economic system which are unprecedented and unlikely to repeat themselves. Primarily they are World War I and II, the great depression, massive population growth, and incredible technological advancement. If you see the 21st century as being a relatively stable (in terms of population, international politics, and technological advancements) than inequality will naturally rise as a result of low growth. Piketty admits his prediction is weak as it is impossible to predict these independent variables. (I think Piketty is limited here. If anything, global warming is already cause instability which will increasingly hurt the poor and increase inequality even more). I read Piketty as being rather Rawlsian about the subject of income inequality. He states multiple times there is nothing wrong with income inequality. It is the merit in the income inequality. A system in which heirs of wealth can make significantly more money with capital gains than your average worker is extremely problematic to his view of justice. Capitalism is fine if wealth is based on merit. I'm interested to read more but his book is not easily labeled 'Marxist' or 'Socialist'. It appears mostly academic.
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Apr 29, 2014 06:05
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Real hurthling! posted:The danger here is that claims like this about Marx go unchallenged simply because it is a basic and stubborn premise of modern, serious economics that Marx is a crank that nobody needs to read. In sociology, where Marx is acknowledged as an absolutely foundational stalwart of the field, the exact same criticisms of him are made. This is because these criticisms are real, and true, and if you're going to talk about him you should acknowledge him. You can taxonomize Marx into three sections: His critique of capitalism as an economic system, which is brilliant and largely holds true despite his narrow data--mainly, that workers impoverish themselves with every hour of labor they commit, relative to the capitalist--his critique of capitalism as a social system--the 'species being' and 'alienation' bits, which are underdeveloped compared to modern scholarship but were seminal and still very relevant today--and his prescriptive ideas about communism, about a social and economic system which could replace capitalism--which is where both his predictions fail and he is most easily criticizable.
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Apr 29, 2014 10:32
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NNick posted:I just finished the introduction. First I will touch on the Marx bit and then go onto more interesting parts of the chapter. Well, the nineteenth century just to be clear. I agree he has criticism of Marx, but to be honest they are in fact very common ones and in many ways have already addressed by other scholarship, however I have a hard time separating his work completely from Marxian understanding of economics even if it is from a liberal perspective especially since he does admit much of what he is doing does have that connection. It is very possible to criticize Marx and still use (even if it is indirect at times) much of what he did. I don't think his criticisms are in any way damning either and are obviously debatable. quote:I feel his discussion of Kuznets is more interesting. As stated earlier, Kuznets collected income data in the US from 1910 to 1950. He saw a dramatic reduction in income inequality and extrapolated that capitalist countries become more equal over time. Capitalism thus would rise all boats in the tide of capitalist growth. The theory turned out to be based on myopic data and much of Piketty's work is continuing Kuznet's data to the 21st century to draw conclusions about income as it relates to capitalist economies. These conclusions have been covered in much more eloquent means than my own, but.. I think in some ways Piketty falls into the same trap as Marx and and Kuznet (maybe to an even greater extent) does, in that it is very difficult to predict policy and social responses to economic trends. Marx didn't predict how the 20th century worked out, but neither was his prediction without merit especially since even if "the" crisis didn't happen, it is was certainly a century with very many smaller crises. In addition, in an ironic sense, Marx by publishing his findings in fact "tainted" the future since political Marxism and even social democracy still has many of its roots in Marx. If anything failed to predict how successful his ideas would actually be and what type of impact they would have on how many societies functioned. quote:I read Piketty as being rather Rawlsian about the subject of income inequality. He states multiple times there is nothing wrong with income inequality. It is the merit in the income inequality. A system in which heirs of wealth can make significantly more money with capital gains than your average worker is extremely problematic to his view of justice. Capitalism is fine if wealth is based on merit. I'm interested to read more but his book is not easily labeled 'Marxist' or 'Socialist'. It appears mostly academic. To be fair you can be Marxist and academic, but yes it isn't a Marxist analysis but one that still has many connections to Marxian economics and to be honest strengths the Marxian argument more than weakens it. Also, while his understanding of Western European and American history is strong, his understanding of Russian history is quite weak.
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Apr 29, 2014 13:07
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asdf32 posted:For reference, it's that inequality on its own isn't going to cause an economic crisis. The economy has, can and will continue to operate with high levels of inequality. I suppose you are going to argue that a crisis is an acute event (such as in 2007-2008), but there is recent evidence that more unequal societies experience less durable growth than more equal societies. I've only read the executive summary (the rest comes later today), but I would call prolonged bouts of non durable growth a crisis.
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Apr 29, 2014 17:22
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Ardennes posted:I think in some ways Piketty falls into the same trap as Marx and and Kuznet (maybe to an even greater extent) does, in that it is very difficult to predict policy and social responses to economic trends. Piketty actually mentions this over and over again, and thinks his book has a dumb title that he argued against because there's no way to predict what the situation will look like in the mid-21st century, much less the end of it.
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Apr 29, 2014 18:25
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Swagger Dagger posted:Piketty actually mentions this over and over again, and thinks his book has a dumb title that he argued against because there's no way to predict what the situation will look like in the mid-21st century, much less the end of it. That is the thing, he says that then ultimately in his conclusion more or less violates his own rules through the solution he offers and how he presents it. He castigates Marx and the Soviets and then offers a "softer solution" when in fact that solution is based on a implicit assumption. Marx offers a completely radical solution to what he thought was a radical problem, and ultimately it did not work out as he thought (but neither was he completely disproven). Piketty tries to not to make any predictions but ultimately by offering the solution he does, does in fact implicitly make one. quote:The solution to the problem of capital suggested by Karl Marx and many other How is this not in its own way making assumptions on the future?
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Apr 29, 2014 18:35
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MickeyFinn posted:I suppose you are going to argue that a crisis is an acute event (such as in 2007-2008), but there is recent evidence that more unequal societies experience less durable growth than more equal societies. I've only read the executive summary (the rest comes later today), but I would call prolonged bouts of non durable growth a crisis. Not to mention that the more unequal a developed society is, the worse off it is in every objective sense. There are higher levels of crime, lower life expectancy, more incidences of mental health illnesses, higher levels of teen pregnancy, etc etc etc. These worse outcomes don't just affect the very poorest of those unequal society, they affect everyone except those at the very top of the income scale.
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Apr 29, 2014 18:54
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Ardennes posted:To be fair you can be Marxist and academic, but yes it isn't a Marxist analysis but one that still has many connections to Marxian economics and to be honest strengths the Marxian argument more than weakens it. I agree that Piketty's argument's do enhance Marxist critiques of capital as well as other progressive political beliefs. I think Piketty excludes himself from Marxian economics primarily for his academic career. Had this or his other research been clearly Marxist, it would not get nearly the attention in the media/public. By staying away from Marxism, he appears more 'objective'.
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Apr 29, 2014 19:22
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rscott posted:Not to mention that the more unequal a developed society is, the worse off it is in every objective sense. There are higher levels of crime, lower life expectancy, more incidences of mental health illnesses, higher levels of teen pregnancy, etc etc etc. These worse outcomes don't just affect the very poorest of those unequal society, they affect everyone except those at the very top of the income scale. Certainly many bad things correlate with absolute (not relative) poverty as well.
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Apr 29, 2014 19:42
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rscott posted:Not to mention that the more unequal a developed society is, the worse off it is in every objective sense. There are higher levels of crime, lower life expectancy, more incidences of mental health illnesses, higher levels of teen pregnancy, etc etc etc. These worse outcomes don't just affect the very poorest of those unequal society, they affect everyone except those at the very top of the income scale. I saw an article about a week ago showing that those at the very top of the income scale spend a fair bit more on security in more unequal countries. Whether the gains of plutonomy less the costs of security are greater than the cost of more equality I don't know, but there almost certainly are costs to greater inequality for the very rich.
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Apr 29, 2014 19:51
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asdf32 posted:Certainly many bad things correlate with absolute (not relative) poverty as well. Are you going to continue making bland, intentionally vague statements about basically everything or do you intend to participate in the debate? So far we have been treated to your (bland and vague) opinion about economies and inequality and some one liners here and there about things that no one will disagree with because you haven't said much at all. It is a free thread (I guess) and you can post whatever you like but your statements aren't really a form of either debate or discussion.
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Apr 29, 2014 19:57
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asdf32 posted:Certainly many bad things correlate with absolute (not relative) poverty as well. Absolute poverty is not as large of an issue in first world economies as relative inequality is. This does not refute a single thing that I have said.
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Apr 29, 2014 19:57
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I wonder if the severe relationships between inequality and health effects are purely a western/modern phenomenon in societies that preach equality and a lack of hierarchy as fundamentally good things. I can see why a lack of obvious equality would have serious mental effects on an American raised in such a culture, but in societies where the equality of all people is not taken for granted, does that exist? Did the peasants in Babylon, Egypt or Norman England go to sleep seething balls of rage? In China today people seem fairly blasé about inequality, but the entire culture is based on hierarchy and patronage as necessary, fundamental elements. P.S. I just started Piketty's book and I don't think I've seen a quote that wasn't from the introduction by anyone criticizing it.
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Apr 29, 2014 19:58
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Fall Sick and Die posted:P.S. I just started Piketty's book and I don't think I've seen a quote that wasn't from the introduction by anyone criticizing it. I just quoted from pages 480-481. quote:I think Piketty excludes himself from Marxian economics primarily for his academic career. Had this or his other research been clearly Marxist, it would not get nearly the attention in the media/public. By staying away from Marxism, he appears more 'objective'. Certainly it isn't explicit and that is for a reason, that said, I think "excludes" is way too forceful considering how much this book actually borrows or at least accepts. It isn't a "Marxist" work but also I don't think you can fully separate it either even if he does lob a few throws at Marx and Marxism. Ardennes fucked around with this message at 21:27 on Apr 29, 2014 |
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Apr 29, 2014 20:19
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Has any writer strayed in the psychological & social ramifications of wealth inequality and built a theory there? Based on historical trends it seems like there is a strong cicular trend which roughly equates to: Poor kill the wealthy / powerful-> short span of growing equality-> small number of extremely tenacious poors gather massive wealth and power -> dynastic era / gilded age-> later dynasty is too pampered and ignorant to hold onto wealth and power, tries to wring more out of unequal society -> poor kill the wealthy / powerful. Best summary I can do typing on a phone. Has anyone ever explored this concept of innate and recurring cycles in the wealth divide, or am I blowing smoke and should just sit down?
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Apr 29, 2014 22:26
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Rime posted:Has any writer strayed in the psychological & social ramifications of wealth inequality and built a theory there? Based on historical trends it seems like there is a strong cicular trend which roughly equates to: Well there certainly is a cyclical nature to inequality, that said, I don't know if I say it is such a closed cycle outside of maybe Russia. In the US, there wasn't a revolution and for the most part the wealth stayed wealth even if you had robber barons that started poor, however there was also a period of growing equality. In terms of Russia, you certainly did have a old rich that was swept away, a period of enforced equality and then the "new rich" of the 1990s who looted the country.
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Apr 29, 2014 22:35
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Shoot, wrong button.
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Apr 29, 2014 22:37
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England/the UK also doesn't seem to match the pattern you gave Rime, the overthrows where they exist tending to be either an outside invader or upper class rebellions.
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Apr 29, 2014 22:37
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Rime posted:Poor kill the wealthy / powerful-> short span of growing equality-> small number of extremely tenacious poors gather massive wealth and power -> dynastic era / gilded age-> later dynasty is too pampered and ignorant to hold onto wealth and power, tries to wring more out of unequal society -> poor kill the wealthy / powerful. I'm having a bit of trouble with it. Do you think you could make some sort of graphical triangle out of it, maybe with bright color gradients and unlabeled axis?
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Apr 29, 2014 22:48
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I don't want to be way off topic here, but doesn't extreme inequality lead to a sort of feudalism through the entrapment of people in debt? Once you destroy normal employment and normalize debt, you have essentially recreated feudalism. That is what inequality causes. With the popularity of neo liberal policies since the 80's, which have helped to shift the wealth upwards, we've seen this pattern repeat itself. It seems like this is a large part of the problem that no one is talking about. Neo liberalism is responsible for a large part of this, at least in the last 40 years.
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Apr 29, 2014 22:51
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I was mainly thinking of countries where an old nobility was eradicated prior to the industrial revolution, which allowed for the rise of ultra-wealthy capitalist class dynasties in the resulting power vacuum, in this example. Countries such as France or Russia especially, prompted by reading the editorial today on why Piketty is not seeing much traction in France but really blowing up in the US. Due to the wrench of two world wars and the imbalance they created in global economies, the cycle (if such a thing even exists) has been interrupted for much of this century. Hence, Piketty is stating the obvious to a country like France who already ate the rich, but the very young nations of North America are experiencing this for the first time. Rime fucked around with this message at 22:55 on Apr 29, 2014 |
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Apr 29, 2014 22:53
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