[governance] NYT: Thomas Piketty and His Critics (long email)

[chlebrum .]

Thanks, very interesting

Chantal Lebrument
EUROLINC


2014-05-15 10:33 GMT+02:00 michael gurstein <gurstein at gmail.com>:

> One has to ask how long “Internet Governance” aided and abetted by the
> active and willing collaboration of “civil society” will be able to
> maintain its isolation from the broader issues of social justice and
> economic inequality; particularly since there is increasing evidence of the
> highly significant contribution which the Internet and digitization
> processes are playing in exacerbating and accelerating the processes that
> Piketty has so devastatingly documented.
>
>
>
> That NetMundial failed to even allow these issues to be raised, will I
> think be seen as a highly significant historical failure.
>
>
>
> M
>
>
>
> *From:* Ottawadissenters at yahoogroups.com [mailto:
> Ottawadissenters at yahoogroups.com]
> *Sent:* Wednesday, May 14, 2014 6:55 PM
> *To:* Ottawadissenters at yahoogroups.com; futurework at vancouvercommunity.net
> *Subject:* [Ottawadissenters] Thomas Piketty and His Critics (long email)
>
>
>
>
> Thomas Piketty and His Critics
>
>    - by Thomas B. Edsall
>    - May 14, 2014 NY Times•
>
> Many on the left see the popularity of Thomas Piketty’s new book, “Capital
> in the Twenty-First Century,” as a sign of hope, but both optimists and
> pessimists share a belief more telling than Piketty’s success: the idea
> that the traditional Democratic economic agenda is dead.
>
> Piketty’s book reinforces the idea that the domestic policies liberals
> advocate for are palliative, not curative — that, in essence, inequality is
> here to stay.
>
> The problem of deepening inequality is enormous, Piketty writes: “Growth
> can of course be encouraged by investing in education, knowledge and
> nonpolluting technologies. But none of these will raise the rate of growth
> to 4 or 5 percent a year.”
>
> Instead, he writes, “for countries at the world technological frontier” —
> the United States, Northern Europe and parts of Asia — and “ultimately for
> the planet as a whole – there is ample reason to believe that the growth
> rate will not exceed 1-1.5 percent in the long run, no matter what economic
> policies are adopted.”
>
> Piketty’s analysis articulates what many people on the Democratic left
> feel intuitively, that a domestic tax, spending and regulatory agenda is
> ineffective in the face of the power of globalized capital to grind down
> wages and benefits.
>
> In Piketty’s view, the solution is a measure beyond the political reach of
> any individual nation or international body, as they are now constituted: a
> global wealth tax. Only such a tax “would contain the unlimited growth of
> global inequality of wealth, which is currently increasing at a rate that
> cannot be sustained in the long run and that ought to worry even the most
> fervent champions of the self-regulated market.”
>
> Piketty’s proposed global tax would set rates of 0.1 to 0.5 percent on
> fortunes of less than 1 million euros ($1.37 million); 1 percent on assets
> of 1 to 5 million euros ($1.37 million to $6.87 million); 2 percent on
> holdings of 5 to 10 million euros ($6.87 million to $13.7 million); and a
> sliding scale ultimately reaching 10 percent on fortunes of “several
> hundred million or several billion euros.”
>
> It  would be an understatement to say that a tax on wealth faces major
> implementation problems. James Wetzler, the tax commissioner of New York
> State during the administration of Mario Cuomo, wrote in an essay<http://www.nationalreview.com/agenda/374380/thomas-pikettys-wealth-tax-proposal-has-huge-problems-james-wetzler>that “absent aggressive policy intervention, the Western world appears to
> be headed toward a plutocratic dystopia characterized by wealth inequality
> approaching that of *ancien régime* France.”
>
> Wetzler added in an email that “to make the U.S. tax system more
> progressive, we should focus on strengthening our existing income, estate
> and gift taxes, not on a new starter like a wealth tax. A federal tax on
> wealth would require a constitutional amendment, and we know a lot less
> about its economic impact than we know about our existing taxes.”
>
> Further complicating implementation of a wealth tax, according to Wetzler,
> is that it “must address complexities associated with the fact that so much
> wealth is owned by corporations and other legal entities with dispersed
> ownership.”
>
> And that’s only part of the problem. Who would run a super-national tax
> collection agency? How would the taxes collected on assets owned by one
> person but held in multiple countries be distributed? How would global
> wealth tax supporters actually win the enactment of regulations that would
> require transparency of ownership of real estate, of bank holdings and of
> control of private corporations?
>
> Is it fair to describe Piketty’s analysis (as opposed to the upbeat man)
> as pessimistic? First, Piketty declares that traditional liberal remedies –
> education spending, worker protections, more progressive taxation, family
> stabilization assistance – may be helpful at the margins, but inequality
> will worsen “no matter what economic policies are.” Second, Piketty does
> not offer a weapon other than a massively redistributive and politically
> unachievable tax with which to battle this intensifying inequality.
>
> The unlikeliness of Piketty’s policy prescription becoming reality has not
> placated the right. James Pethokoukis, the money and politics blogger for
> the American Enterprise Institute, exemplifies the aversion to Piketty now
> erupting among American conservatives. Pethokoukis warns<http://www.nationalreview.com/article/374009/new-marxism-james-pethokoukis>that Piketty’s “soft Marxism,” if unchallenged, “will spread among the
> clerisy and reshape the political economic landscape on which all future
> policy battles will be waged. We’ve seen this movie before.”
>
> It’s not only the right that is disturbed; there is also opposition among
> a number of progressive activists and liberal policy analysts who recognize
> the dangers Piketty’s analysis poses to their agenda.
>
> While Piketty notes that “there is widespread discontent with the extreme
> inequality and lack of opportunity and security,” he simultaneously
> reinforces the “passivity and resignation” that comes out of “the failure
> of the state and of center-left parties to do much to change what’s
> happening,” Robert Kuttner, the founder and editor of The American
> Prospect, told me in an email. And so, Kuttner wrote, “working class people
> give up on it.”
>
> Dean Baker, co-director of the Center for Economic and Policy Research, a
> liberal economic think tank, took a harsher view of liberals’ attraction to
> Piketty. In an email, Baker wrote that “a big part of the appeal is that it
> allows people to say capitalism is awful but there is nothing that we can
> do about it.” Baker, who has formulated a detailed domestic agenda<http://www.cepr.net/documents/piketty-comment-2014-04.pdf>to fight inequality, worries “that many people will feel that they have
> done their part after struggling through a lengthy book on economics, and
> now they can go back to their vacation homes and say it’s all a shame.”
>
> It may be that Piketty is right that traditional liberal policies are
> largely ineffective. There are, however, grounds to challenge this
> pessimism. Support for this challenge can be found not only on the left,
> but also on the center-right.
>
> Kenneth Rogoff, a Harvard economist, contends in a review<http://www.project-syndicate.org/commentary/kenneth-rogoff-says-that-thomas-piketty-is-right-about-rich-countries--but-wrong-about-the-world#kYyhjdex29T8e54I.99>of Piketty’s book that “the idea of a global wealth tax is replete with
> credibility and enforcement problems, aside from being politically
> implausible.”
>
> Rogoff views evidence of growing inequality presented by Piketty and
> others as “persuasive” and he proposes a number of alternative,
> smaller-scale remedies to control disproportionate wealth accumulation. He
> suggests a shift to a “relatively flat consumption tax, with a large
> deductible for progressivity.” Consumption taxes apply to spending, as
> opposed to income taxes that are levied on wages, benefits, profits from
> sales, dividends and other gains. Why, Rogoff asks, should we “try to move
> to an improbable global wealth tax when alternatives are available that are
> growth friendly, raise significant revenue, and can be made progressive
> through a very high exemption”?
>
> Rogoff cites a series of suggestions<http://www.project-syndicate.org/commentary/jeffrey-frankel-argues-that-attacking-the-ultra-rich-is-an-inefficient-way-to-reduce-inequality>developed by Jeffrey Frankel, a professor at the Kennedy School at Harvard.
> These include “the elimination of payroll taxes<http://www.taxpolicycenter.org/taxtopics/Payroll-Taxes.cfm>for low-income workers, a cut in deductions for high-income workers, and
> higher inheritance taxes.”
>
> Despite the criticism of Piketty from right, left and center, he has, by
> shifting the focus from income to wealth, successfully transformed the
> debate over inequality.
>
> His influence is reflected in two essays by Clive Crook, a financial
> columnist at Bloomberg View. The first was an unrelentingly negative
> review<http://www.bloombergview.com/articles/2014-04-20/the-most-important-book-ever-is-all-wrong>of Piketty’s book, the headline of which gives you the flavor of the rest:
> “The Most Important Book Ever Is All Wrong.”
>
> “Every claim,” Crook argues, “is either unsupported or contradicted by
> Piketty’s own data and analysis.”
>
> On May 11, however, Crook did an about face and wrote a very different
> essay<http://www.bloombergview.com/articles/2014-05-11/picketty-s-wealth-tax-isn-t-a-joke>,
> “Piketty’s Wealth Tax Isn’t a Joke.”
>
> “One idea that’s been roundly dismissed by fans and critics alike deserves
> to be taken more seriously: the proposal for a global wealth tax,” Crook
> writes, noting that “on equity and efficiency grounds, it makes sense to
> tax wealth.”
>
> Crook, too, sees insurmountable difficulties for any entity that might try
> to collect an annual wealth tax and argues instead for “moderate but
> effective taxation of capital income combined with moderate but effective
> taxation of inheritance, so that unrealized gains are brought back into the
> tax base, either during the course of an investor’s life or at death.”
>
> In other words, centrists like Rogoff and Crook — in addition to liberals
> determined to assault bastions of privilege — are beginning to take
> proposals to restrain the growing concentration of wealth seriously.
>
> Both the shift of attention to wealth and the seriousness with which a
> proposal to constrain the accumulation of wealth is being taken represent a
> major change in the contemporary debate over inequality. Few Americans
> appear to begrudge the multimillion dollar annual compensation of
> entrepreneurial executives like Steve Jobs or Bill Gates. But inherited and
> unearned wealth does not command the same legitimacy.
>
> In fact, the emergence of what Piketty calls “patrimonial capitalism” —
> concentrated wealth and political power passed on from generation to
> generation in a class-based social order — runs directly counter to the
> longstanding American commitment to equality of opportunity. Piketty has
> laid the intellectual groundwork for a challenge to a social and political
> order based on socioeconomic ranking by wealth stratification.
>
> Now we need effective politicians to articulate this challenge in ways
> that resonate with a striving electorate determined to achieve a higher
> standard of living through grit and hard work. Where is the level playing
> field? Politicians who seek to gain traction on these issues face high
> hurdles, but only those willing to risk confrontation can address the depth
> of public discontent, anger and resentment.
> Original URL:
>
>
> http://www.nytimes.com/2014/05/14/opinion/edsall-thomas-piketty-and-his-critics.html?emc=edit_ty_20140514&nl=opinion&nlid=4223025&_r=0
>
>
>
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