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Will Piketty’s Book Change the World?

The left is desperate to believe that Capital in the Twenty-First Century will turn America to socialism.

by
Jean Kaufman

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April 30, 2014 - 10:20 pm
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When I was a child I had a little book that purported to list and describe one hundred “books that changed the world.” I forget what most of them were, but I am virtually certain that the Bible and Marx’s Das Kapital were prominent among them.

The current ecstasy on the left about Thomas Piketty’s new book on economics and income inequality titled Capital in the Twenty-First Century is more than mere admiration. The acclamation appears to reflect the left’s hope that it will be another of those books. To the left, Picketty’s arguments are so clearly brilliant (and/or so potentially seductive to the have-nots and the guilty haves), and the problem of income inequality so vast, that their hope is that the book will finally be the ticket to convincing the reluctant of the benefits of the left’s economic proposals.

Just for the sake of argument, let’s imagine that Piketty’s thesis is correct. The question then would remain as to whether Piketty is merely preaching to the choir, or whether it is likely that a significant number of people who are not already convinced of the truth of what he says would be persuaded by what he writes. In other words, would the American people accept his “remedies,” such as an 80% tax on the rich (defined as 500K to 1 million in income) and a 50%-60% tax on the sort-of-rich-but-not-all-that-rich (defined as an income of 200K) and think those are actions they should support politically?

I can’t see that happening in the foreseeable future, although I can see taxes on the rich being raised somewhat, as they have under Obama, and then millimeter by millimeter inching upwards over time. But if such taxes do end up rising to astronomical levels, it probably won’t be because of Piketty and his attempt to use history and statistics to convince us that they should. It will be because politicians on the left have been successful in using rhetorical appeals to the envy that is ever-present in the makeup of human beings. They’ve been doing that more and more lately already, without Piketty’s help.

Karl Marx’s highly influential book — the one that “changed the world” — was titled Das Kapital: Kritik der politischen Ökonomie (Capital: Critique of Political Economy). Why did it catch on so? Probably because it was an idea whose time had come. Capitalism, and the industrial revolution that really got the capitalism engine going, were still relatively new and unregulated, and socialism/Communism on anything but a micro level had remained relatively untried. Back then it was easier to hope and even to think that it might work as Marx said it would. And it’s important to note that America was always one of the less fertile grounds for Marx’s theories as compared to Europe, in part because Marxism derives a great deal of its appeal from the “class struggle” in societies where the classes are more rigid than they are here.

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Top Rated Comments   
A retail store manager once explained to me that "With fancy enough packaging, you can sell anything--even sh*t!" Not long after, the garden department brought out beautiful yellow-and-black bags of "Black Kow"---composted cow manure. Piketty is the fancy packaging.
13 weeks ago
13 weeks ago Link To Comment
Piketty and his publisher have created something of value to many people who are willing to part with a little money to obtain it. Piketty and his publisher are richer than last year and next year will be even richer due to their created value. Piketty will look at his bank statement and think “this is my money that I worked for”. He will probably not think of it as money he stole from poor people.
13 weeks ago
13 weeks ago Link To Comment
"We also need fewer liberals in the world pushing these banana republic ideas that never work ........ ".

As "pushers" these ideas work magnificently ... for the pusher. Obama, who has never produced a single thing of meaningful value nor run as much as a hot dog stand, is now worth millions. Even an insignificant little twerp like Chelsea Clinton can look forward to a life of gated estates and flush bank accounts. Ah, the wonders of socialism.
13 weeks ago
13 weeks ago Link To Comment
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All Comments   (42)
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America's voters are stupid. Their election and re-election of bill "But I Didn't Inhale" clinto was a very bad sign. Their election and re-election of the Obammunist proved it beyond a doubt.

I will never trust the collective American voting public again.
12 weeks ago
12 weeks ago Link To Comment
Here's capitalism's truth, implemented in practice here in these USA!
From May 2, 2014 Federalist we get this latest headline.
1)Toyota to move its California headquarters (where it’s been since 1950) to Texas.
2)Occidental Petroleum is moving to Houston, TX in February.
3)Calpine Corp., from San Jose moved to Huston in 2009.
4)Fluor Corp moved from Orange County to Dallas in 2006
5)Nissan Motors moved to Tennessee in 2006
6)Honda in the process of moving all its upper echelon to Columbus, Ohio.
7) Businessweek, summer 2013, noted a 5.2% loss of business statewide in California. Note: these are but a handful of some 250 businesses moving out of California.
8) Governor Jerry Brown has been spending his time pushing his Prop-30 tax initiative. This would raise tax rates on all upper income individuals and businesses in his state as well as a retroactive tax on entrepreneurs. Did you get THAT. Retroactive!!!! Tax & Spend, folks. Arizona’s Verde Valley has been the new home of many wealthy California transplants.
California wants Prop 30 for spending on WHAT? Well let’s list a few items:
1) Environmental extremism
2)Coddling collegiate activism (Janet Napolitano, new head of Education)
3)Unleashing socialist idealism (read: Marxist/Leninist ideology)
4)Incubating liberal ideology, (this is the “Marxian Worm” conundrum)
5)Lead the way in experimental statism. (a quasi-Fascist ideology)
6)California government seeks, always, to enact quackery social causes. Spain tried this, with a near collapse of its financial/economic sectors.
Now, the truth about California’s loss of its entertainment industry to USA Southern States and Canada.
1)Twenty years ago, Canada undertook an aggressive effort to court movie and television productions. This involved tax breaks and agreements with labor unions to fabricate conditions studios just couldn’t refuse. So much US film and TV work now takes place in Canada that a whole new, immense entertainment infrastructure has been built there. It’s one of Canada’s major successes. So much so, Canada’s efforts have now been the model other American states have used to entice all California’s entertainment industry; not only to use them as a filming location, but to establish a growing, jobs-creating industry.
2) State of Louisiana was seeing only a few million dollars of revenue provided by scattershot film shoots. Governor Jindal organized an intense period of luring Hollywood with tax incentives and favorable business conditions. Today,Louisiana’s entertainment sector has swelled to a booming industry with a growing base of companies generating revenue into the hundreds of millions of dollars.
3) State of Georgia, with a slightly different twist, has also looked to build itself into an entertainment option. Beginning with a growing animation industry as a base, Georgia began attracting movies and television productions. The Walking Dead, the most popular dramatic cable program, is a Georgia-set production. Last year the state landed a coup the likes of which Hollywood specifically, and California in general, would salivate to possess. Pinewood Studios is a revered production facility in England that has been the filming home of many popular epic motion pictures, from the James Bond franchise to the Harry Potter franchise. Pinewood announced it would be expanding to the U.S., but not in Studio Land, California. Its new sprawling soundstage facility is located just south of Atlanta, where the new Marvel super hero film Ant-Man has begun filming.
4) Instead of looking at numbers and statistics, the best illustration of California’s loss of entertainment work can be found in two blockbuster films coming to theaters. Next week (May 2014) brings Godzilla to theaters, with a bulk of that story set in the San Francisco area. Later in the year we will see San Andreas, an action epic starring Dwayne The Rock Johnson. These films sport immense budgets and large production staffs. Both are staged significantly in California. BUT: both were filmed elsewhere. The entirety of filming for these titles in California involved nothing more than exterior establishing shots. This amounted, for each title, to less than one week’s worth of work. Get it!!!

Conclusion: The worm has turned, California meanwhile is reeling. Artist’s Groups have been formed by studios, guilds, and other labor groups in order to lobby the state for competitive and favorable tax conditions. The requests for lower taxes in order to spur business growth and job creation sounds like it could have been lifted from a Reagan policy paper. (Darn if this doesn’t smack of “trickle-down” economics, Laffer Curve's Supply-side economics)) Harvey Weinstein, a campaign bundler for President Obama, has pleaded with the Los Angeles Film Czar to go to Governor Brown for more industry-targeted economic support. This is a direct call for corporate welfare that the Weinstein-Obama camps love to deride – at least verbally. See folks, capitalism v
13 weeks ago
13 weeks ago Link To Comment
I doubt if Piketty's book will inspire Francois Hollande to voluntarily relinquish his million euro holdings of rental properties in the south of France.

Or inspire Harry Reid and his crime family to give up their wealth.
13 weeks ago
13 weeks ago Link To Comment
Didn't Eisenhower not raise taxes up to 90% once upon a time?
13 weeks ago
13 weeks ago Link To Comment
No, but Eisenhower did cut the budget and reduce the WWII debt. He was the last President to actually reduce spending.
12 weeks ago
12 weeks ago Link To Comment
The power of Das Kapital is that it provided a vague justification for state sanctioned mass thievery and mass murder on moral grounds. The one fundamental weakness of capitalism is that it inevitably leads to surplus wealth an d affluence; anyone familiar with the natural world realizes that predators will invariably evolve to feast on such easy prey. If the only justification for not robbing, enslaving and/or murdering the people responsible for your well being is based on an ethical foundation, why not simply invent a new system of ethics to replace the troublesome "bourgeois mentality" and go start knocking these people on the head?

Leftists aren't stupid. They're just criminals. The details can always be worked out later, just so long as their newest system of beliefs justifies taking what the peasants make without their permission.
13 weeks ago
13 weeks ago Link To Comment
One of the things I learned along the way was that businesses that enjoy a monopolist position will stifle innovation and milk the current line for all it's worth. The old cash cow call. And what we call an economy and a business environment is actually an old cash cow business that is well beyond it's useful life and only provides a return because it is protected from competition.

Most folks realize the only way to get rid of being stuck with what the cash cow provides in products or services and be able to move on to new and better things at better prices resulting from competition is to get rid of the cash cow and that usually takes government.

We are currently mired in a long term slow and fitful recovery that is still far from being recovered. Now the first thing to realize is we're stagnant. Cutting any spending is stupid. Sorry, but anyone who has a clue including Republicans knowledgeable of business and economics knows that economies don't grow without spending. There is $2.2 trillion in savings and has been for several years. Why? there is no place to invest. There is no demand for investment. They can't do a damn thing with all that money except watch it grow.They all realize they will need it at some point, but it's just useless now. It is wasted capital.

On the other hand the stagnant economy has produced an excess of labor, unemployment. It is wasted labor.

Wasted capital and wasted labor draped across the economy like a wet blanket while it drags an anchor of housing production less than half what it was prior to the crash. What the good professor misses as will the foolish titans of business is there is an efficient balance between capital and labor in terms of the distribution of earnings. If the balance skews too far to one side, then unused factors of production begin to accrue on each side and we find the situation we are in today. We have a balanced, stagnant economy that will not improve until the unused factors of production are more efficiently used.

The economy must be stimulated and since one market, housing, is the holdup, stimulating the whole economy would be a waste. we could pump money into housing and bubble it up again, but a repeat wouldn't be fun. A lot of new spending is what's needed. The most effective way to stimulate the economy is for employers to provide significant pay raises to employees.

It is an investment of a portion of that $2.2 trillion in the company's employees. It wills serve to put money into the pockets of workers who are working for spending on a recurring monthly basis, prompting purchases of large ticket items, such as homes and furnishings. Spending in those categories will increase jobs and demand for investment eliminating the excess on both sides. The investors will see a much better return on their money from that investment than anything they're looking at now.

Sadly, I'm afraid they're committed to the old cash cow.
13 weeks ago
13 weeks ago Link To Comment
That is what crony capitalism is all about: milking the status quo and freezing the status quo for the benefit of the oligarch.
12 weeks ago
12 weeks ago Link To Comment
Sure. Federal administrators need more yachts for their slips on the Potomac. Furthermore, their borrowing and spending is good for the economy. We peasants need to accept that we are liable for all that borrowing and spending, for our own good, and should just bend over and shut up.

It's already past the tipping point. The few businesses still located here are struggling to make ends meet, but forcing them to pay more in payroll shouldn't be a problem. They're probably going out of business soon anyway, so why not?

We didn't need all this stimulus when the federal apparatus wasn't a huge bureaucratic dinosaur. Our poverty problems were not nearly as bad as after we created that huge safety net that's strangling everyone under its weight. But what do I know. We just solved the problem of inadequate health care by making it a criminal offense not to have healthcare insurance. Now all we need to do is make poverty a crime by fining people who don't make enough money. Or maybe we can throw them all in jail, then use the prisoners to pick cotton or some such. Why not. The Romans tried this sort of tax collection in the 5th century AD, and look how far it got them.
13 weeks ago
13 weeks ago Link To Comment
re: "It's already past the tipping point."

Don't forget, it is an affront - requiring loss of one's job, to contribute to a ballot initiative. Brendan Eich, former CEO of Mozilla, was throw under the bus by howling mobs, including his own board of directors.

Innovative and skilled Americans with "old-fashioned" ethics will have to start businesses in places like Singapore if they wish to avoid being burned at the figurative stake and ruined in the public eye.
13 weeks ago
13 weeks ago Link To Comment
This book has the power to have quite an influence. The reason is not that it sets up a good argument, or a trap or is perticularly eloquent. The reason is that in the negative comments or reviews I've seen, the premise is never challenged. Some argue about the validity or context of his numbers. Some argue that his conclusions aren't always/often tied logically to the numbers.
The book makes two points: that income inequality is evil and that growing one's income by return on investment is even more evil and should be punished.
I've seen many reviewers ask if society would be better off if a worthless heir squandered his wealth instead of investing it in factories and machineries. I've seen reviewers say that these investments help the workers be more productive and earn more.
But that's not the heart of the matter. First one must attack the idea that great income inequality is evil. Why? If I make an average salary working as a truck driver, why should I care that some people make millions selling iphones? If they make a lot of money it means they are very productive. They reshape matter to create useful stuff for life on earth. How is their success hurting me? Let them try to argue against that.
The second point of the book is that the worse form of income inequality is the one obtained when average return on capital outgrows the economy. Why is that bad? The book says that it creates more and more inequality, that the benefit of investments principaly goes to the investors owning the factory, not the workers on the factory.
Then ask how many cars a day a worker produces when working on an assembly line. Would anyone dare to say that the size of his paycheck is solely the reflection of his physical ability? A piece of steel forged for weeks in a furnace would be all that his physical ability would produce. The rest is a gift from the men above him, not only those who invested in the factory but of ingineers who invented the car and the assembly line and of the scientists who taught them the science required for the building.
Ask yourself now who should get the greater return: the man who is able to perfection the assembly line so that it can produce at a 10% faster rate or the man who will switch the gears in the control room. Who much has the guy switching the gears added to the economy and how much has the guy perfecting the assembly line? 10% percent for the man perfecting the assembly line. 0% for the man switching the gears. How was the man perfecting the assembly line able to achieve it? With funds provided by the investors, investors who had then intelligence to see what that man could accomplish with that money. Without perfecting his skills the man of lower ability still receives part of the benefit of that improved productivity. How could you call it unfair that he receives a part that he has not earned?
13 weeks ago
13 weeks ago Link To Comment
It's simple really. The reason I should care is a practical concern. Why should I drive a truck when some wealthy fellow has a lot of surplus wealth lying around just waiting to be taken from him? Instead of wasting my time in a productive trade, why don't me and my buddies go over to this fellow's house, beat him until he forks over some cash, then get drunk on the proceeds? Even better if I can have a goon squad do it for me, then just have them leave the stolen loot in a bag on my porch.

That, in a nutshell, is how the welfare industry works. Thus why welfare bureaucrats drive fancy cars to and from the suburbs while the ranks of the poor and unemployed continue to grow. It's also why the people running the system are so keen to keep things as they are, or even to expand on the take if possible.

Obama spent over a billion dollars on his campaign during the last election. He didn't blow all that money to do you any favors.
13 weeks ago
13 weeks ago Link To Comment
I wouldn't care if communism worked or not. It's bad enough with all the taxes the government takes to run all its redundant programs. But to say that my labor belongs to the state? Screw that! I'm only here once, and my time belongs to me and my family. It's not my fault there are so many losers who made bad choices. We have that safety net. It's not supposed to be a hammock. If people think that only the rich can have decent lives then they grew jealous somewhere along the line.
13 weeks ago
13 weeks ago Link To Comment
The problem with Piketty is that he analyzes fascism/Socialism, correctly identifies the income disparity it produces, then declare Capitalism the culprit.
13 weeks ago
13 weeks ago Link To Comment
No Pciketty's solutions will not work...but a return to Parity for Agriculture and Labor will work as demonstrated by the success of Parity during World War II and there after.

Real economics starts with production, the production of essential wealth at a price that affords a profit for the family farm that produces essential wealth.

This production of food at a market price that can bring a profit, creates the earned income necessary for the translation of that essential wealth to be passed through the economy not as a debt, but as a profit that can purchase save and invest.

As we are not doing this basic thing anymore, we create a nation of dependency, dependent upon the latest scheme to divide a shrinking pie.
13 weeks ago
13 weeks ago Link To Comment
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