Samuelson on Piketty

Robert Samuelson devotes his most recent column to Thomas Piketty, the French economist whose work on income inequality has become a cause célèbre among American progressives:

Agree or disagree with his views, Piketty’s project represents a prodigious research achievement. With other economists, he has constructed statistics tracing the distribution of income and wealth for many major countries back to the 1800s. The most obvious conclusion from the data is common-sensical: Even relatively egalitarian societies have huge disparities in economic fortune.

Dr. Piketty’s preferred solution seems to be taxation. My own view is that taxation is probably the easiest to enact but the least effective way of solving the problem, at least in the current state of American political policy.

Some people have always been more talented, hardworking, or just plain lucky than others. They haven’t always been able to corral such a large proportion of income and wealth. I don’t believe that the difference is either in the people or in the underlying economy but in the policies that have been put into place for which there are significant consensuses in both Congressional caucuses. Over the period of the last thirty or forty years a series of what are called “neoliberal” policies have given a significant advantage to areas that receive subsidies while stripping them from areas that don’t.

Another solution that progressives sometimes propose, stronger labor unions, is even less likely to succeed. That’s a cargo cult mentality, a form of the post hoc propter hoc fallacy. I believe that the underlying labor conditions, conditions of relatively tight labor markets and increasing marginal productivity of labor, made labor unions attractive and promoted the distribution of income and wealth. We don’t have those conditions any more.

Meanwhile, I think we need to recognize that if we keep doing what we’ve been doing, we’ll keep getting what we’ve been getting. The political class is more than happy with that.

9 comments… add one
  • ...

    We don’t have those conditions any more.

    Might be effective to try and enact policies to bring back those conditions. But it gets in the way of crushing the American worker (the goal of Republicans and Democrats alike) and of a permanent Democratic majority (the goal of all Democrats of consequence).

    So instead of measures to tighten the labor market, we’re going to get endless propaganda about how importing tens of millions of Third World peasants is going to create dozens of new Googles….

  • ...

    The political class is more than happy with that.

    And after decades of this happening, one can either assume that they’re the dumbest people in America, or that this is by design.

  • ...

    And the focus on taxes by progressives is entirely a smoke screen, as they know damned well it won’t accomplish anything for “equality”. It’s all bullshit designed to keep the useful idiots in line.

  • I think that Upton Sinclair’s remark to the effect that people will believe anything when their incomes depend on their believing it is relevant.

  • the focus on taxes by progressives

    There’s a question I’d like progressives to answer. It’s a two-part question:

    1. What do they think Warren Buffett’s effective income tax rate should be?
    2. How do they propose to accomplish that?

    Nominal tax rates are meaningless.

  • ...

    I think that Upton Sinclair’s remark to the effect that people will believe anything when their incomes depend on their believing it is relevant.

    I’d be more forgiving of that mentality if it didn’t so often include making certain that other people get crushed. So fuck them and their (no doubt convenient) myopia.

  • ...

    Also, at some point reality should intrude. They’ve been bringing in more labor to crush wages for how long? Since before I was born, that’s how long. Am I supposed to believe that none of the people behind these policies have ever heard of the concepts of supply and demand? Shouldn’t decades of stagnating wages have been reconciled with some basic microeconomic understanding at some point?

    Again, I can either believe the elites of America are the most stupid educated people on the planet, or I can assume they know what they’re doing and are goddamned ecstatic about the results – in private, of course, where none of the peons are likely to overhear the conversations.

  • ...

    More stories of our wonderful economic recovery:

    For many Americans, ‘temp’ work becomes permanent way of life

    Moving in with parents becomes more common for the middle-aged

    Cheery stories, both, five years into the “‘recovery'”.

  • Guarneri

    There is a well regarded Harvard economist/social scientist (name escapes me right now) who set out to write a book on how to reverse income inequality and basically gave up the ghost after awhile. The usual pop nostrums just didn’t stand up to scrutiny. It’s a very complex and multi-faceted issue. Certainly the lefts and pols universal answer, more govt and more taxes, won’t get you there.

    As for immigrant labor, just this evening I was listening to an interview with a union sympathetic prof ( an advocate for unions as the road to less income inequality) and who has just written a book conceded that a) the seeds of the inequality increase really could be traced to before the huge “low wage” immigration influx and b) it was the pro-union voting proclivities of immigrants years ago that caused unions to originally be pro immigration.


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