USA #1 IN WEALTH INEQUALITY + USA #1 IN INCOME INEQUALITY = PIKETTY PROVED WHY AND HOW TO END THIS TRAVESTY = INJUSTICE TO THE 99+% OF HUMANS IN WORLD!
Great Depression + WW II = Losses to financial capital = Powerful era of equality
Piketty 1.0 justly celebrated BREAKTHROUGH book = makes it clear concentration of income and wealth are again approaching Gilded Age levels = 15 Years building the most comprehensive data set on inequality ever assembled = 3-Powers = Precision in Data + Analysis + Prose = Historic Work of Scientific Analysis and Mathematics applied to Economics.
Piketty PROVES that mature capitalism does not distribute its benefits to all of Society
Piketty = Demonstrating that wealth in a mature capitalist economy concentrates wealth and income in the hands of a FEW!
Piketty Proves = Wealth concentrates in FEW HANDS because income on Capital Income tends to grow faster than GDP (Labor). = Interest + dividends + “rents” = 5+% growth for 2+ centuries. = PASSIVE INCOME
Piketty Proves = Wealth concentrates in FEW HANDS because GDP grows at only 1% to 2% = LABOR INCOME
Piketty Proves = Wealth concentrates in FEW HANDS because CAPITAL INCOME TENDS to GROW 2 to 3 TIMES faster than LABOR INCOME!
Piketty Proves = Wealth concentrates in FEW HANDS = RICH get RICHER and WEALTHIER = Concentrated in hands of a FEW
Piketty Proves = Wealth concentrates in FEW HANDS = Very wealthy are able to realize higher returns than the merely moderately wealthy = Access to well-paid advisers + Insider knowledge (Trading) + Hedge-fund investing + Flash trading + Scams not available to the ordinary small investor.
Piketty Proves = Wealth concentrates in FEW HANDS = Inequality of wealth Reinforces MORE WEALTH and GREATER INCOMES in FEWER AND FEWER HANDS
Piketty Proves = Wealth concentrates in FEW HANDS = Demolishing conservative economic MYTHS = LIES OF TRICKLE DOWN + LIES OF SUPPLY SIDE + LIES OF JOB CREATORS + LIES THAT THE VALUE OF CAPITAL INCOME EXCEEDS VALUE OF WORK INCOME. = convenient Conservative myths
Piketty Proves = FALSITY that workers and capitalists are paid according to their skills or the marginal value of their product = convenient Conservative myths
Piketty Proves = The labor market is a Social Construct (by the RICH) using specific rules and compromises to MAXIMIZE CAPITALISTS PROFITS.
Piketty Proves = Education does not solve the problem of rising inequality because education is not its main source.
Piketty Proves = Top executives increasingly have power to set their own SALARIES
FACT = In a market system, monopoly profits are supposed to be competed away.
Piketty Proves = Extreme Wealth = Rigged rules + Exploiting public domain innovations = Bill Gates “enjoyed a virtual monopoly in operating systems” and relied on the research of thousands of unsung scientists and engineers.
Piketty 1.0 = Exception to a relentless wealth concentration was 1914 to 1945 = Can the exceptional period of greater equality be replicated with the right policies = like postwar boom? = 2 WWs, Inflation, Depression, rise of Fascism, Bolshevism, New Deal
Piketty 2.0 = Triumph of the democracies when domestic power alignments EQUALITY-ORIENTED policies more possible than usual. FDR + UNIONS
Piketty 1.0 = Reduced Inequality = Loss of a lot of inherited wealth and the weakening of the finance class. = The destruction of wealth.
Piketty 2.0 = Postwar era = Strengthening of labor and of public institutions dedicated to more generally shared prosperity.
Piketty 1.0 = Describes what happened after 1914 is more mechanical spirit of a narrow technical economist. = Concentrated social class and inherited wealth was followed by war and depression which destroyed narrowly help wealth/capital = less Wealth concentration and LESS INEQUALITY. = Jane Austen and Honoré de Balzac Era
Piketty 2.0 = There is much more to the history of capitalism’s era of greater equality Piketty 1.0 ignores. = But Piketty’s research demonstrates that inflation, on average, was almost nonexistent in the century before World War I and that the real returns on capital were stable and predictable, typically about 5%.
FACT: The pre-WW I upper classes were rentiers—the major part of their income came from capital that they had inherited or perhaps added investment interest income, or Rents on physical structures and land, and in rare cases entrepreneurship. = Few fortunes were self-made.
FACT: The gold standard pre-WW I was basis of the world’s major currencies—francs, dollars, pounds, and marks—were freely convertible at predictable rates.
Piketty 1.0 = Refers to Balzac’s novels = Fastest route to affluence and comfort is to win the hand of a rich man’s daughter who is neither pretty nor charming but who is worth a millions. = Could “thus immediately achieve ten times the level of comfort to which he could hope only to aspire years later on a…salary.” = Inherited Wealth over hard work.
FACT: During the INDUSTRIAL REVOLUTION Wealth/Capital = land + stocks + bonds + industrial plants + urban real estate = Maximized wealth and Income concentration in the HANDS OF THE FEW prior to WW I. = Analysis of Original Forbes 400 WEALTHIEST calculated that 341 of the 400 fortunes (85%) were rooted either in inherited wealth, lucky timing, or government contracts.
Piketty calculates = Only 33% of current Forbes fortunes are primarily entrepreneurial.
Piketty 1.0 = When WW I broke out, the stable, reliable world of capital was destroyed. = France’s overseas holdings shrunk. Czarist bonds, a favorite of the rentier class, were soon worthless.
Piketty 1.0 = Massive government borrowing to finance the war triggered inflation, ended the gold standard, and destroyed the secure relationship between capital and income.
Piketty 1.0 = WW II demolished both physical capital and financial capital even more than WW 1 = Reducing Inequality = Compressing the wealth distribution like the wealth had been deliberately confiscated.
Piketty 2.0 = A great deal more occurred to cause the brief and exceptional era of greater equality on both sides of the Atlantic.
Piketty 2.0 = WW I demolished the WEALTH of the Rich in Europe + Then 1920s era was stupid = Deflationary policies + Needlessly high unemployment = Conservatives hapless effort to rebuild the prewar rentier CLASS chased after unpayable war debts + tried to RECREATE PAST CURRENCY VALUES = Result was Deflation + Deepening Austerity + High Unemployment = WW 1 did reduce Wealth of the Rich BUT DID NOT BENEFIT TO MIDDLE CLASSES!
Piketty 2.0 = WW I for US = the world’s dominant industrial and financial power + US wartime policies allowed the RICH to profited handsomely from the war boom + ADDED to extreme WEALTH and INEQUALITY of the Gilded Age grew until 1929 and The Great Crash and the Depression destroy some fortunes.
Piketty 2.0 = WW II + aftermath was more significant era for WEALTH AND INCOME LOSS AND COMPRESSION.
Piketty 2.0 = WW II in Europe was massively destructive of both physical capital and financial wealth.
Piketty 1.0 = Treats the period of 1914-1945 as a single statistical era for purposes of understanding wealth compression in all the major Western nations, the American experience was entirely unlike Europe’s.
Piketty 2.0 = In USA the most interesting years are 1941-1973, not the years bracketed by the two wars as Piketty 1.0.
Piketty 2.0 = In USA 1941-1973 was the most powerful era of equality WW II to Nixon. = WW II was a massive stimulus with full employment + Strong Unions + Investment of public capital. + Repressed private finance in multiple and reinforcing ways = Treasury bonds held at 2.5% maximum + 94% TOP TAX RATE ON HIGH INCOMES + Intensified anti-speculative financial regulation of the New Deal.
Piketty 2.0 = to 1973 lasted until unions were bashed and finance deregulated started with Nixon in 1970s. = The political dynamics changed to Economic Liberalization (DEREGULATION) with Reagan in 1981.
Piketty 2.0 = Reduction of US Inequality from WW II to 1973 was due to the policies pursued.
Piketty 1.0 = The aftermath of WW I led to depression and fascism!
Piketty 2.0 = The aftermath of World War II was followed by a boom of widely shared prosperity. = Reconstruction from 1944-1948 (opposite of 1920 Conservative deflationary policies + austerity) deliberately created domestic full-employment welfare states.
Piketty 1.0 = Said the era of shared growth was simply the shrinkage of inherited wealth of RICH + weakening of financial elites made possible a politics of broad gains for the wage-earning class.
Piketty 1.0 = Europe = 30 glorious years of high growth and full employment while inequality came back strong in late 1940s as capital began recovering its normal place. It was rather high rates of growth, rising real incomes, and the expanding welfare state that made the postwar boom a happy French memory.
Piketty 2.0 = A great nostalgia in the US postwar boom = A period of steadily rising wages and job security—a period of both rapid growth and LOWER INEQUALITY = more equal distribution of Wealth and Income.
Piketty 1.0 = “The significant compression of income inequality over the course of the 20th century was due entirely to the diminished top income from capital.” = 50% of the Story.
Piketty 2.0 = The other 50% is that the temporary weakening of capital, financially and politically, gave progressives and social democrats an opening that they successfully exploited for three decades after the war.
Piketty 2.0 = US postwar era (1947-1973) of increasing equality = “The Great Compression,” as economist Claudia Goldin termed it = Partly the top 30% losing its WEALTH and associated INCOME + The greater equality of labor income of that period.
FACT: Sweden’s social democratic era = NO war needed to destroy wealth at the top as labor gained power at the expense of capital. = Used the political process to entrench and redouble its gains using POLICY CHANGES that REALIGNED WEALTH AND INCOME = HIGHEST STANDARD OF LIVING IN THE WORLD. = Piketty 2.0
Piketty 2.0 = 1930s US was under-employed and underinvested = Overhang of the losses from 1929 and the dynamics of what the economist Irving Fisher termed “debt-deflation” left purchasing power depressed and business with too little appetite to invest.
Piketty 2.0 = Technical breakthroughs like television and commercial aviation were underexploited because of weak Consumer demand. Unemployment 15% + shortfall in investment.
Piketty 2.0 = After Pearl Harbor = First six months of 1942 = $100 Billion War Department orders and the economy roared back to life. = Public investment capital = VIRTUALLY IGNORED PRIVATE BANK CAPITAL!
FACT = Turned out that you did not need to give private capital exorbitant rewards for the economy to prosper.
Piketty 2.0 = Era of the postwar MIDDLE CLASS boom = RICH CLASS (rentier class) suffered with NEGATIVE Real rate of return on capital + Inflation reduced the value of bonds, and the stock market languished.
Piketty 2.0 = Era of the postwar MIDDLE CLASS boom = As low PUBLIC capital costs CREATED A THRIVING ECONOMY = MOST IMPORTANT FINDING!
Piketty 2.0 = To get a MIDDLE CLASS BOOM THEN USE NEAR ZERO% COST PUBLIC CAPITAL to gain FULL EMPLOYMENT AND A BOOMING REAL ECONOMY = TO HECK WITH THE FAKERY OF MULTINATIONAL WALL STREET SCAMMING = MINIMIZES WEALTH AND INCOME INEQUALITY!
Piketty 1.0 = Projects a society in 2030 as unequal as that of the Gilded Age.
Piketty 2.0 = PUBLIC CAPITAL invested in a green transition to save the Planet
Piketty 2.0 = PUBLIC CAPITAL invested in NEW PUBLIC COMMUNICATIONS INFRASTRUCTURE
Piketty 2.0 = PUBLIC CAPITAL invested in 1 Teacher for Every 15 Students
Piketty 2.0 = PUBLIC CAPITAL invested in the frontier of NEW technical possibility.
FACT = Book The Entrepreneurial State by Mariana Mazzucato suggests that this is not necessarily so. Private capital is myopic when it comes to long-term pursuit of technological breakthroughs.
Piketty 2.0 = PATIENT PUBLIC CAPITAL invested in the fruit of UNIVERSITY RESEARCH = LONG-TERM BENEFITS!
Piketty 2.0 = PATIENT PUBLIC CAPITAL invested in increased productivity growth + Skills Development + FULL Employment + Technology frontiers = on an ongoing basis.
Piketty 1.0 = Supports a more progressive income tax
Piketty 1.0 = Supports a quality higher education system everyone can use
Piketty 1.0 = Issues a call for a “social state for the twenty-first century.”
Piketty 1.0 = Each nation impose a “global tax on capital” to fund PUBLIC SPENDING = NO KOCH OR PETERSON OR RUBIN ALLOWED = Should have done this in 2009! But another opportunity is coming!
Piketty 1.0 = Recommends a new repression of finance = Far tighter regulation of banks and hedge funds to reduce them back to pre-1973 SIZES! = Weaken their political power.
Piketty 1.0 = Questions whether increasing concentration of capital ownership is a mutation of “meritocratic extremism” that reflects the ability of executives to pay themselves ever-higher salaries disconnected from what they contribute to the society and take from the economy.
FACT = CANNOT count Wall Street bonuses or corporate mega-salaries as “labor income.” = Reflect and reinforce the extreme inequality and POWER of our age
Piketty 1.0 = WALL STREET class of super-managers = Socially & politically rentiers = NO Salaried and independent professionals and middle managers.
Piketty 2.0 = Understands the important role of unions and shifting power relations. + More inclusive institutions and better regulation policies did promote [postwar] mobility and growth.”
Piketty 2.0 = Favors green transition, led by public capital.
Piketty 2.0 = We need both institutions and politics like that which once undergirded greater equality.
Piketty 2.0 = Yes two World Wars + A Depression reduced inherited wealth = Good news is OTHER POWERFUL OPTIONS EXIST to create a Vibrant Middle Class.
Piketty 2.0 = The effort of both statesmen and organizers and PUBLIC INVESTMENT can maximize the opportunity that history offered for A GROWING MIDDLE CLASS!
FACT = Right-wing intellectually bankrupt GOP OFFERS NO SOLUTIONS to a DECLINING MIDDLE CLASS AND USA #1 IN WEALTH AND INCOME INEQUALITY!
Piketty 1.0 = ENDS REAGAN VOODOO FOR GOOD and EXPLAINS THE POLICIES CAUSING MASSIVE WEALTH AND INCOME INEQUALITY – ESPECIALLY IN USA!
NOW LETS USE PUBLIC INVESTMENT AND GOOD GOVERNMENT POLICIES TO GROW NEW MIDDLE CLASSES AROUND THE WORLD AND ELIMINATE POVERTY, HUNGER, AND MOST DISEASES.