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Thomas Piketty On Capitalism And Inequality

Red-hot political economist Thomas Piketty on inequality in the 21st century. And Economist Gregory Mankiw responds.

This undated photo provided by Harvard Press shows French economist Thomas Piketty. In his new book, Piketty, who helped popularize the notion of a privileged 1 percent, sounds a grim warning: The U.S. economy is beginning to decay into the aristocratic Europe of the 19th century. (AP)

This undated photo provided by Harvard Press shows French economist Thomas Piketty. In his new book, Piketty, who helped popularize the notion of a privileged 1 percent, sounds a grim warning: The U.S. economy is beginning to decay into the aristocratic Europe of the 19th century. (AP)

Capitalism had a pretty great story in the twentieth century.  The giant inequalities of the past receded.  Wages rose.  Democracy triumphed.  And economists told us, by in large, this is what capitalism does.  Now comes a new voice with a roaring bestseller, a ton of new data, and a very different story.  Economist Thomas Piketty is the hottest thinker on the planet right now.  And his message is that the twentieth century was an outlier.  That capitalism is now pulling us back to inherited wealth and punishing inequality.  If he’s right, what do we do?  This hour On Point:  Thomas Piketty, and “Capital in the Twenty-First Century.”

– Tom Ashbrook

Guests

Thomas Piketty, author of the new book, “Capital in the Twenty-First Century.” Director of studies at the École des hautes études en sciences sociales.  Associate chair at the Paris School of Economics.

N. Gregory Mankiw, economics professor and chairman of the economics department at Harvard University. Former chairman of the Council of Economic Advisers under President George W. Bush. Author of “Principles of Economics.” (@gregmankiwblog)

From Tom’s Reading List

New York Review of Books:  Why We’re in a New Gilded Age — “Still, today’s economic elite is very different from that of the nineteenth century, isn’t it? Back then, great wealth tended to be inherited; aren’t today’s economic elite people who earned their position? Well, Piketty tells us that this isn’t as true as you think, and that in any case this state of affairs may prove no more durable than the middle-class society that flourished for a generation after World War II.”

Greg Mankiw’s Blog: First Thoughts on Piketty — “The bottom line: You can appreciate his economic history without buying into his forecast.  And even if you are convinced by his forecast, you don’t have to buy into his normative conclusions.”

The Economist: Le French touch — “The French seem almost bemused by the sudden international fame of their home-grown economist. ‘Thomas Piketty, une star américaine,’ ran the headline of an article in La Tribune, a business newspaper. Le Monde ran a story pointing out that Mr Piketty was referred to ‘only five times’ as French in a piece in the New Yorker, as if this were proof of his being taken seriously.”

Read An Excerpt Of “Capital In The Twenty-First Century” By Thomas Piketty

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  • Miriam Pickens

    It baffles me when I think of a family with an income that regularly exceeds $1,000,000.00 per year. Friends who have incomes between $100,000.00 and $150,000.00 seem to have an excess of everything they need. When I see those obnoxiously high salaries and I think of how many minimum wage people they employ, not to mention the slave wage factories overseas, I wonder about how they can honestly justify not elevating the financial status of their employees. I wonder what their view is of the people they employ. Do they even see them as “people”?

    • Fredlinskip

      They are investments.
      Business majors at prodigious universities learn very little about ethics.
      You can either love “Capital” or “people”:
      it’s difficult to have it both ways.

      • Miriam Pickens

        interesting!

        • Acnestes

          That’s why there are so many apparent sociopaths at the top.

      • Human2013

        Well said. Here is the dichotomy and dilemma of America.

    • ToyYoda

      Well, I make about $150,000.00 when I choose to work. But, I like being unemployed, sipping tea, playing piano, or doing math. And every so often, I’ll talk to the waitress serving me tea or coffee cake. :)

      Speaking for myself, I treat everyone with respect, willing to give them my time and listen to whatever it is they have to say. Lots of people in my income class don’t view the bottom income class. What I mean is, the bottom is invisible. They are not thought of at all; “just someone getting me my Venti Latte.” I believe this is the common case. The less common cases are the ones who view them with contempt and others who view them with compassion; both cases are often split along party lines.

      By the way, do you realize if I make $150k a year, I’m still considered part of the “99 percent”? I don’t think we will get anywhere in terms of addressing inequality unless we have a frank discussion about what it means to be poor. But outside of math and the hard sciences, defining terms, axioms, postulates, and undefinable terms, seems to be unpopular.

      • brettearle

        You mean the Upper Classes will perk up their ears and actually listen–if there’s a frank discussion?

        I don’t think so.

        The first thing that they would have to reconcile is Guilt: For feeling Superior and for Living Well

        The Well-Off are NOT going to do that.

        What happened at the Titanic?

      • Miriam Pickens

        ToyYoda…you didn’t read what I said…I said the people making millions each year who employ people at slave wages aren’t treating people with respect. I was saying that people who earn what you do are comfortable enough and that earning a millions on a regular basis, especially on the backs of people earning very little, is obnoxious.

    • Acnestes

      They see them as commodities.

      • John Cedar

        I have over 300 employees and most of them are liabilities.

    • brettearle

      Greed blinds people to compassion.

      It’s a Scientific Law.

      • Don_B1

        Even people who have gotten wealthy by winning a large payout in a lottery have much more favorable attitudes toward rich people deserving their money, no matter what they do with it.

        • brettearle

          You might be interested in a study done, by a Berkeley psychologist–reported in Solman’s Economy reports, by the PBS NewsHour–on how people become more entitled and arrogant as they accumulate wealth.

          Maybe a year ago, or a bit less….

          Thanks…

          • Don_B1

            Thank you, I had missed that.

            Here is a link that includes links to, I believe, the piece that Paul Solomon reported on for PBS. I haven’t got that far yet, but intend to check it out further:

            http://informedcommoner.blogspot.com/2013/06/uncomfortable-truths.html

            This is an interesting site, a lot of chaff but some good stuff also.

          • brettearle

            Thanks Much

    • jimino

      It is against the law (civil) for a corporation to be concerned about its decisions personally affect its employees.

    • StilllHere

      Well you’re getting a lot of responses from people who don’t employ anyone and it’s obvious where they are coming from, mostly ignorance and envy.

      I employ a handful of people, they make considerably more than minimum wage, and if profits permit it, bonuses can vary and be substantial as they share in the success of how we’re doing. My employees are crucial to our business and I want to make sure they are happy, that’s why I use a third party service to survey how engaged they feel. I’m not sure how sustainable a business model like you describe would be, and therefore doubt it exists in significant numbers.

      • Miriam Pickens

        Kudos to you…I suspect that many employers use your model. You can’t deny, however, that some of the world’s wealthiest people are employers of some of the world’s poorest workers.

        • kaybee63

          I think the further away you are from “directly” employing your employees, the more hierarchical levels between you and them, the easier it is to see them as costs that need to be kept down. Henry Ford was unusual in thinking of the big picture – “Pay them enough so they can buy the product.” Walmart on the other hand, apparently relies on government help in buying their product, thus the drop in profits when the food stamp program was cut, directly affecting their employees and their products. Not that Walmart is all bad – when Walmart wants to go sustainable for instance, people perk up and the market responds. But shouldn’t they pay their employees enough to live without food stamp aid?

          • John Cedar

            The Ford pay is a myth. He increased pay in order to reduce turnover and to compete with the other companies for competent employees.

      • John Cedar

        These hypocrites employee minimum wage people indirectly. While they muse about redistributing John Galt’s assets, they are driving in their Highlander to the oil change to have their servants change their oil and then through the drive through at Starbucks to have their servants make them an espresso and then across the street to the gas station with the penny cheaper price then over to Sam’s Club for a tub of migrant picked berries and then back to Panera to have their soup and salad for lunch. And after shopping at all these chains that pay min wage they brag because they don’t shop at Wally world.

        • StilllHere

          What, they don’t walk the talk? I am shocked!

        • kaybee63

          Stereotype much?

          • John Cedar

            Almost 400 comments here and many of them stereotype.
            Selectively criticize much?

          • kaybee63

            Looking at the history of your comments, I think I chose well. I TRY not to generalize about conservatives in my posts and have been known to agree or at least concede a point on the conservative side, since I do try to see both sides. You, on the other hand, have a particular tendency to paint all liberals with a very broad brush, and I’m just calling you on it.

          • John Cedar

            I do not ,try not to, generalize about liberals. No need to “call” me on that.

            Your pointing out that you occasionally agree with conservatives and try to see both sides is just condescending sanctimony. I on the other hand truly do try to see both sides and agree with liberals on some issues.

    • Don_B1

      At points above $1 million, it is mostly the power and prestige that leads people to want even more. It is the competitiveness that has driven people from the beginnings of civilization that leads some to always want more, in some more than others, but it seems a pretty universal trait.

      Earned fortunes of more than some value, such as $20 million, even $50 million, are probably not harmful in any way. Note, however, that most members of Congress are millionaires and that does seem to give them an insulation from the exigencies of life experienced by the working class. And Mitt Romney’s fortune is estimated at around $250 million, probably considered measly by those with $10s of billions.

      There are two aspects of the growth of income and wealth in the U.S. particularly, but in Europe to a lesser extent also, is the growth of earned income for the top executives in corporations, which has been written about a lot over the last decade and more, as well as the increasing percentage of the superrich whose wealth was inherited. It is probably only the fast growth of pay packages for CEOs, etc. that has kept that form of wealth growth the source for more than half of the most wealthy.

      The next question is why is this happening:

      One of the biggest reasons may well be the reduced tax rates that the top CEOs face as a result of the tax cuts over the last three decades. It encourages private company owners to take more income from their businesses rather than reinvesting it in their companies to grow them, or, for example, buy a company plane so travel can be less burdensome (like avoiding all the inspections at airport security and the many more multiple hop trips), a perk for the executive that may not make that big a contribution to growing the business as it costs.

  • ToyYoda

    Fantastic! I was going to ask onpoint to do a feature on Piketty and his new book.

    To give you an idea of just how much talk this book is generating, it’s the number one best seller on Amazon for the last 43 days, even beating out fiction books.

    This book has garnered so much discussion, that even The Economist is doing a book club on the book, where every week they read a chapter and do an indepth analysis and critique! Amazing.

    So bravo for OnPoint! I am looking forward to this.

  • LinRP

    This is an hour-one segment, IMO. It shouldn’t be relegated to feature status in hour two.

    • Human2013

      I agree, but many markets throughout the country don’t broadcast the first hour. Its obvious that the show is liberal leaning and the first hour is usually the “hot topic.” This may have been a strategic decision by On Point to get a wider audience.

      • brettearle

        Do you happen to know why some markets ONLY broadcast the second hour?

        You mean some NPR markets are less Left-leaning and also want `softer fluff’ [i.e. second segment]–by comparison to a core-issue segment, which can be perceived as one with Liberal intent?

        • Human2013

          Im in Southeastern VA and the first hour is not broadcast, so I use my app to listen. I’ll let you come to the conclusion as to why the first hour isn’t broadcast south of the Mason-Dixon line.

          • brettearle

            Interesting.

            So NPR’s sense of Equality and Fairness doesn’t prevail?

          • nkandersen

            Hello all!

            It’s also possible that we here at On Point were only able to book Mr. Piketty for our second hour, notwithstanding your thoughts on why different markets carry our different hours.

            But please, carry on.

            Best,

            nick andersen
            web producer | on point radio

          • brettearle

            Nick–

            What do you think, though, of Human2013′s point, above mine?

          • nkandersen

            He’s incorrect; the first hour is broadcast South of the Mason Dixon Line in more than a few markets — all over South Carolina, many parts of Florida, many parts of Georgia and Alabama, Texas, etc.

            Stations that air only one of our hours well after broadcast sometimes make a choice to rebroadcast different topics per the news of the day; booking and scheduling sometimes put guests like Mr. Piketty in our second hour.

            nick andersen

          • brettearle

            Thank you.

          • Human2013

            Here in Southeastern VA the second hour is broadcast live, but the first is not. It’s also not rebroadcast at all during the day/night. At least today’s important show will reach my neighbors. Also, be cautious of your use of pronouns – I’m a she..better to just refer to the screen name.

          • nkandersen

            Sorry for the gender mis-identification! My sincerest apologies.

          • HonestDebate1

            I am south of the Mason-Dixon line and get the first hour.

          • Human2013

            of course you are…I think I already knew that.

  • ToyYoda

    Okay. I just read Mankiw’s entry on wiki. This is going to be a lively show. Can we please drop the first hour, and make this segment a two hour discussion? :)

    • brettearle

      Good idea.

      There are some topics that are too important to only devote 1 segment to.

      Methinks that the NPR Rating Marketeers claim that variety is the spice of Ratings.

      Short-attention span and all that….

    • HonestDebate1

      On the surface, Mankiw is a darling of the left because he is a Republican that criticized the Bush tax cuts. However, that was a long time ago and I don’t know what how stance is now.

      • Don_B1

        He also supported a lot of Keynesian theory, although he has been expunging some traces (notably in a text book) lately.

        Some of his comments in his blog have been notably lame when he has tried to justify the 1% as being “an ever-changing group.” See:

        http://krugman.blogs.nytimes.com/2014/04/22/inequality-1992/

        Or when he tried to claim that while the superrich were pulling away from the rest, they “earned it.” This is becoming less true with each successive year:

        http://krugman.blogs.nytimes.com/2014/04/16/piketty-day-notes/

        paragraphs 8-11:

        This brings us to the latest fallback position of inequality’s apologists, one that has lately been associated in particular with Greg Mankiw — namely, that maybe the one percent have been thriving, but they earned it. After all, we’re talking about self-made men here, not heirs to inherited wealth, right?

        Now, this is actually a very weak argument on multiple levels. Although the apologists love to talk about movie actors and sports stars, the highest incomes in America overwhelmingly go to executives, whose contributions to the economy are largely in the eyes of the beholder. And anyway, marginal product isn’t moral justification; even if you believe that, say, Sandy Weill was so much better than the next best alternative that his earnings reflected his true contribution to GDP, that says nothing about whether it was fair or just for him to keep so much more of those earnings than he would have been able to if 1960s tax rates were still in effect.

        But in any case, the presumption here is that modern wealth is self-made, nothing like the inherited fortunes of ol. And you know the reply: “Oh, yeah? Guess what.” What Piketty shows is that inherited wealth has been making a comeback, that it’s already a much bigger factor than most people even on the left realize, and that it’s on track to become much larger still.

        And this really is a revelation. Piketty’s literary sources are Jane Austen and Balzac; our modern conceptions, even among liberals worried by rising inequality, tend to be shaped by the likes of Oliver Stone. Yet it turns out that Gordon Gekko is an increasingly outmoded archetype. Yes, he’s a predator — but he’s very much a self-made predator. And while those people still exist, the economic elite is increasingly made up of their sons and daughters. As I’ve noted, six of the ten wealthiest Americans, according to Forbes, are Walton and Koch heirs; further down the list are a lot of old men, who will soon be passing their wealth on.

        Clearly there will need to be something positive done to end this soon, or the entrenched powers will be able to stop anything short of revolution, which will not lead to a good result at all.

        Also see the trend which shows that the U.S. is becoming less a democracy and more a patrimony in the first must read here:

        http://www.bbc.com/news/blogs-echochambers-27074746

        which provides a link to the first draft (PDF) of an article to be published this fall, (recent study).

  • Human2013

    The Economist had an interesting article explaining why Picketty’s book didn’t make a splash in his own country. The book has been out in French for over a year. The consensus is that the book was not “social” enough and this issue has already been decided in France with a sizable wealth tax.

    “Perhaps the chief reason, though, is that questions about inequality, the centrepiece of Mr Piketty’s research, have long been central to the political debate in France, a country that already has an annual wealth tax on assets. This has been true for the right as much as for the left.”

    If only our “right” would recognize the grave consequences of income inequality.

    • brettearle

      The Right rationalizes the consequences of Income Inequality by stressing the hackneyed notions of Rugged Individualism and how the Underclass must pick themselves up by their bootstraps.

      The Right’s claim that those with money, who own businesses, can make America prosper again is undermined by the fact that the Plutocracy is not declining.

    • nkandersen

      As you can see, we did include the link to that Economist article.

      Glad you’re using our reading lists!

      Best,

      nick andersen
      web producer | on point radio

  • Human2013

    I have long thought that America is not a place about Americans or their financial well-being. If China owns most of our public debt, can you imagine what they own in private investments. The truth is that most of the world’s foreign investors, Saudi Princes and dictators alike, use the US markets to enrich themselves. While the hedgefund and investment houses may have American owners, their investors are largely foreign. We have let the world’s richest people make millions, possibly billions, on the backs of Americans.

    • brettearle

      It seems to me that you have pointed out how the specter of the Global Economy has, ultimately, trounced a greater voice and investment, by the average US citizen…

      ….as that citizen tries to survive in a plutocracy, where the spirit of Democracy is now heavily compromised.

    • Don_B1

      Actually, while it is high in the list of individual holders of U.S. debt, China holds less than $1.4 trillion of the total of something over $16 trillion in public debt, or less than 10%, and if it tried to radically cut that amount in a short period of time, it would hurt itself more than it would the U.S. See:

      http://usgovinfo.about.com/od/moneymatters/ss/How-Much-US-Debt-Does-China-Own.htm

  • Acnestes

    I’m surprised the bags haven’t already been here to flood the place with dire warnings about Marxism.

    • brettearle

      Be patient.

    • jefe68

      HD’s up and at it already. He’s keeping their seats warm…

      • HonestDebate1

        Do you endorse the book because it confirms your pre-conceived notions? Do you find it odd the libs are lining up so eager to do so as they accuse the right of being anxious?

        • jefe68

          I’ve not read the book. So I neither endorse it nor deny it’s premise.
          I also would be wary of anything AIE is touting as well.

          You’re the one who posted what you posted. By the way there are flaws in the Burkhauser/Cornell study and you might want to read up on it. For instance: The Burkhauser approach shows the bottom 20 percent of the income distribution with median income growth of 26.4 percent, while the top five percent experienced a 63 percent increase.

          There is more to chew on this, but you keep taking your talking points from Limbaugh, as he’s such an expert on economics.

          http://campaignstops.blogs.nytimes.com/2012/04/22/the-fight-over-inequality/?_php=true&_type=blogs&_r=0

          • HonestDebate1

            The link is from AEI regarding a study by Cornell. Why evoke the Rush monster? Why ignore the flaws in Picketty’s book? That’s weird.

          • jefe68

            You really need to work on your comprehension skills.

          • HonestDebate1

            I’m not the one who brought up Rush.

          • Ray in VT

            Who was the first one to bring up ole Rushbo’s critique of that “wuss” Piketty?

          • nj_v2

            …At which point DisHonestPrevaricator slinks off to post the next round of vaporous prattle.

          • Ray in VT

            Probably just storing up the next reeking pile to drop on us. It is stall cleaning day after all.

          • nj_v2

            Hahahahahahaha!!

            DIsHonestPrevaricator posts so much garbage, he can’t keep track of it.

            Greggg’s first post on this, four days ago:

            http://onpoint.wbur.org/2014/04/25/nathan-deal-ukraine-obama-japan#comment-1355023998

            “Here is a good summary of Picketty’s book.”

            “Here” being this link:

            http://www.rushlimbaugh.com/daily/2014/04/24/the_left_is_giddy_over_new_marxist_book

            The Left is Giddy Over New Marxist Book

          • nj_v2

            DisHonestPrevaricatorGreggg wants us to forget that the first thing he posted on the Picketty book was from Flush.

          • nj_v2

            Greggg read a Rush rant and a load of disinformation from AEI and is now an expert on the “flaws” of the book.

            Hahahahahaha!

            Can’t make this stuff up.

          • Don_B1

            Note the following from your linked article by Mr. Edsall:

            From 1970 to 2010, Saez and Piketty show, the share of total market income going to the top one percent more than doubled, from 9.03 to 19.77 percent. The share going to the top 0.1 percent more than tripled, from 2.78 percent to 9.52 percent; and for the top 0.01 percent, it nearly quintupled from 1.00 percent of the total to 4.63 percent.

            In addition, by focusing on income as reported on tax returns, Saez and Piketty show how market mechanisms distribute wages and other taxable benefits — capital gains, dividends — as opposed to government transfers, entitlement benefits and sources of income like untaxed employer paid health insurance.

            Because Saez and Piketty do not take into account welfare payments, food stamps, Medicare, Medicaid, Social Security and employer-provided health insurance (which are not reported to the I.R.S. as income), they arguably overstate inequality trends. A second caveat to bear in mind is that the Saez-Piketty findings are based on pre-tax income, which is more unequally distributed than after-tax income.

            In addressing the issue of inequality, Saez and Piketty found that from 1970 to 2010, average pre-tax income per taxpayer in the bottom 90 percent of the distribution fell from $31,839 to $28,840 in inflation-adjusted dollars. For those in the top 0.01 percent, market income rose from $2.14 million a year in 1970 to $16.27 million in 2010. The gains at the top from 1970 to 2010 stand in contrast to the post-war period from 1945 to 1970 when the share of income going to those at the top fell. During those earlier 25 years, the share going to the top 1 percent dropped from 12.52 to 9.03 percent; the share going to the top 0.1 percent dropped from 4.16 to 2.78 percent, and the share going to the top 0.01 percent dropped from 1.26 to 1.00 percent.

            which graphically demonstrates the growth of inequality. As usual, the radical-right-for-individuals-rights-to-all-their-income-as-earned-by-them first denied the growth of inequality, and now simply deny that this is bad for the country, and that argument will fall shortly.

            Consider the growth in the country’s prosperity during the ’50s and ’60s, and compare it with the “growth” in the 2000s, and the former wins hands down when the wealth/income inequality was much less.

  • Human2013

    “You are horrified at our intending to do away with private property. But in your existing society, private property is already done away with for nine-tenths of the population; its existence for the few is solely due to its non-existence in the hands of those nine-tenths. You reproach us, therefore, with intending to do away with a form of property, the necessary condition for whose existence is the non-existence of any property for the immense majority of society.”

    Karl Marx, The Communist Manifesto

    Written almost 200 years ago, but an astutely precise observation of the US.

    • Shag_Wevera

      Yeah, but it is Marx. It can’t possibly be right or have any redeeming value.

      • harverdphd

        Right. Look how well it worked out, and at a cost of only 100 million lives or so.

        • Human2013

          It worked so well for China they kindly let us borrow money to keep our country afloat

      • Don_B1

        Karl Marx is correctly derided for his worse than impractical suggestions as to what to do to correct the problems that he so correctly analyzed and showed a deep problem with unregulated capitalism.

        At this moment in time, Thomas Piketty’s proposals for a solution to the growing inequality could not be implemented, but something like them will turn out to be better than the total world-wide revolution that will follow the continued growth of inequality.

        Most radical revolutions do not work out well, as the French Revolution demonstrates. But the entrenched powers, which have reached stronger levels than most people realize, will push back with every type of false argument they can devise.

        The following demonstrates the extent to which the U.S. has moved on the path from democracy to oligarchy:

        http://www.bbc.com/news/blogs-echochambers-27074746

        Please be sure to download the linked recent study for the full study.

  • Steve_the_Repoman

    In Milwaukee WI our infrastructure is crumbling while we debate how much the public should contribute to the building of a new arena for our basketball team.

    Meanwhile the underclass struggles in obscurity.

    I am acquainted with newly arrived immigrants who having been recently evicted must decide between eating and emergency health services. The kids, the youngest of which has a congenital heart disease, eat day old rice of the floor, before walking with their mom to search for a new place to live.

    Our cities are teeming with people like this – have you seen them?

    • brettearle

      Those with a great deal of Money will not often see them and have often never see them.

      Thankfully, there are a few philanthropists among us who take action that save Lives.

      But there are many more that don’t.

      • pete18

        Painting with quite a broad brush, are we not, Brett?

        • brettearle

          Pete,

          Are you really trying to stand up for the privileged in our country–who often (not always) see people, who are not at their station to be:

          Inferior or
          Defective or
          Lazy or
          Unskilled or
          Stupid?

          Or any combination, thereof?

          Looking through some pretty rose-colored glasses there, Pete…are we not?

          • pete18

            No, I’m standing up for fair assessments of all people, rich or poor. Do you have some research or examples other than your emotional distaste for rich people that would back your opinion that “most” rich people don’t see or care about the underprivileged?

          • brettearle

            This ought to get you started….

            http://www.pbs.org/newshour/bb/business-jan-june13-makingsense_06-21/

            You would say that there are a high percentage of philanthropists, among the super rich?

            And that these individuals, who are donating funds out of pure generosity, are doing so, apart from doing it for tax benefits?

            My comment, above your last comment, got much more of a `thumbs up’ than usual–than many comments by any contributor.

            I guess my emotional distaste must be somewhat Viral….

          • pete18

            “And that these individuals, who are donating funds out of pure generosity, are doing so, apart from doing it for tax benefits?”

            I don’t know. Who cares? Is purity of intent more important to you than actual deeds? One could just as easily challenge the motivation of so called do-gooders of lesser means. Do they act out of guilt? Out of wanting to create an image of moral superiority?
            Are they out to please their parents or get into heaven? There’s no way to know a person’s heart on these things. Why you would allow yourself to make broad brush judgements based on a category rather than on an individual and what he or she actually does is inexplicable, particularly given that this type of thinking is the basis for the prejudices that I’m sure you would righteously condemn in other contexts ( racism. sexism, homophobia, etc.)

            “My comment, above your last comment, got much more of a `thumbs up’ than usual–than many comments by any contributor.”

            Sort of like a confederate finding pious comfort in his opinion on slavery because of the number of people in agreement with him.

    • William

      One of the consequences of the massive numbers of illegal immigrants that have flooded into our country has been suppressing wages and jobs for less skilled workers.

  • HonestDebate1

    Is it any wonder President Obama latched on to this? There are lies, damn lies and statistics. This book starts with an outrageously misrepresented number and works backwards to find a way to support it.

    “According to the Cornell study, median household income – properly measured – rose 36.7%, not 3.2% like Piketty and Saez argue…

    …They chose to measure something called “tax units” rather than households, a move which ignores the statistical impact — including economies of scale — of couples who cohabitate, kids who move back in with their parents after college, and senior parents who live with their adult children.

    They chose to ignore the value of all government transfers — including welfare, Social Security, and other government provided cash assistance — received by the household.

    They chose to ignore the role of taxes and tax credits.

    They chose to ignore the value of healthcare benefits.”

    http://www.aei-ideas.org//2012/04/obamas-inequality-argument-just-utterly-collapsed/

    • Matt MC

      Someone is riled up!

      • HonestDebate1

        I hope the Cornell study is discussed. I also hope the show doesn’t devolve into a bash the rich fest implying the middle class got hosed because the rich took their money.

        • Matt MC

          Seems like you’re pretty upset about it already. Why not just keep an open mind for the time being? Listen to what he has to say, and save judgment for later.

          • HonestDebate1

            Upset? Nah, just trying to keep the debate honest. I will listen to the show and have not read the book. But I have heard it discected from various angles and from various sources, the AEI piece being one.

          • kaybee63

            Okay, I’ll betray my ignorance on this – what is this AEI program you’re all referring to? My summer goal is to actually read this book but have not done so yet.

          • kaybee63

            Actually, I may have figured it out – American Enterprise Institute?

          • jefe68

            Yep. That home of neo-conservativism.

          • HonestDebate1

            That was deep.

          • jefe68

            One could find some disparaging quip to counter your incessant inanity, but you do a good job of this on your own.

          • nj_v2

            The cumulative depth of bull excrement you post daily is much deeper. No one can compete.

          • nj_v2

            AEI, mouthpiece for big business, and the interests of the rich and powerful. Subverting democracy through ALEC, supported Bush’s Iraq war disaster. Supported tobacco industry. Among other nefarious activities working against the public interest.

            DishonestMisDebatorGreggg’s kind of people.

            Read all about it:

            http://www.sourcewatch.org/index.php/American_Enterprise_Institute

            …ALEC is a corporate bill mill. It is not just a lobby or a front group; it is much more powerful than that. Through ALEC, corporations hand state legislators their wishlists to benefit their bottom line. Corporations fund almost all of ALEC’s operations. They pay for a seat on ALEC task forces where corporate lobbyists and special interest reps vote with elected officials to approve “model” bills. Learn more at the Center for Media and Democracy’s ALECexposed.org, and check out breaking news on our PRWatch.org site.

            …In August 2011, AEI President Arthur C. Brooks spoke at a “Leadership Dinner” sponsored by Reynolds American at the 38th Annual Meeting of the American Legislative Exchange Council (ALEC).[2]

            …In 1980, the American Enterprise Institute for the sum of $25,000 produced a study in support of the tobacco industry titled, Cost-Benefit Analysis of Regulation: Consumer Products. The study was designed to counteract “social cost” arguments against smoking by broadening the social cost issue to include other consumer products such as alcohol and saccharin. The social cost arguments against smoking hold that smoking burdens society with additional costs from on-the-job absenteeism, medical costs, cleaning costs and fires.[3] The report was part of the global tobacco industry’s 1980sSocial Costs/Social Values Project, carried out to refute emerging social cost arguments against smoking.

            (excerpts)

          • Don_B1

            The one person that I respect is Norm Ornstein, who has done incredible work in analyzing Congress (book: It’s Worse Than You Think with Thomas Mann of Brookings).

          • Don_B1

            If you have not bought it yet, Amazon has sold out of the hard cover printing, but is offering an electronic version for just over $20.

          • kaybee63

            Considering the wait at my local library, I may have to just go the ebook route on this one.

          • Don_B1

            As for the Cornell Study, misused in the AEI piece, a good assessment of its results is here:

            http://campaignstops.blogs.nytimes.com/2012/04/22/the-fight-over-inequality/?_php=true&_type=blogs&_php=true&_type=blogs&_r=1

            This is not a simple subject, which makes it much easier for the deniers (including all the trolls here) to push back on Piketty’s results, which give undeniable empirical results supporting/confirming the less rigorous results that had led to the growing worries about the effects of inequality.

            It also documented two new results, showing that the growth of inequality was just as bad within the 1% as between the 1% and the 99%. It also documented the return of inherited vs. earned wealth, thus decimating one of the right’s major arguments against doing anything about the growing inequality.

            Thus those in the $500,000 to low $1 millions of income should be just as worried about this growing problem, but they refuse to really look at what the data shows and they, like all of the rest of us, though with decreasing strength, still like to think that they can reach the top.

    • jefe68

      One has to wonder how it is that child poverty is on the rise. At least according to your assumptions based in the data from the Cornell study, all is well in the USA.

      More than 16 million children in the United States – 22% of all children – live in families with incomes below the federal poverty level – $23,550 a year for a family of four. With a
      http://www.nccp.org/topics/childpoverty.html

      How 35 countries compare on child poverty (the U.S. is ranked 34th) Above Romania.

      http://www.washingtonpost.com/blogs/worldviews/wp/2013/04/15/map-how-35-countries-compare-on-child-poverty-the-u-s-is-ranked-34th/

    • nj_v2

      Hahaha!!!

      The right-wingers’ panties are really twisted over this.

      The other day, the clown posse leader posts blather from economic genius Flush Limpballs (claiming Mr. Picketty was a raging Marxist, and now an AEI article by a Jeopardy champion!

      The comments at the end of the AEI article, along with voluminous other data pretty much totally refute Pethokoukis’ nonsense.

      • HonestDebate1

        Alrighty then.

        • nj_v2

          ^ More “honest debate.”

      • WorriedfortheCountry

        You are usually in good hands with Jimmy P. He is a straight shooter with economic data. No sugar coating for politics.

        I had no idea he was also a J champion. Good for him.

      • TELew

        I thought his name was Lush Phlegmball!

  • Matt MC

    From what I’ve heard about the book, I agree with the critique, but can you ask the author what alternative economic theories are out there to replace capitalism? I feel like economists need to start thinking about building systems, rather than just analyzing the market and critiquing its ills. Remember, the economy is a human system. Whatever rules we agree upon and are practical can work. I think we can come up with something better than the capitalistic system we have now.

    • Shag_Wevera

      Amen! Are we really incapable of anything better?

      • northeaster17

        Since our shrinking earth is just another capital commodity we had better. At 54 I look at my six year old son at a loss. It’s really up to them. That change is gonna be tough.

  • wauch

    Piketty has revealed the truth – via rigorous historical analysis of wealth distribution – about the state of wealth inequality in the US and western nations.
    Conversely, Greg Mankiw has revealed his conflict of interest and the fact he is a “bought economist” similar to those depicted in the documentary Inside Job. See Mishkin, Hubbard, and Feldstein.
    The idea that economics is a true science is a joke. It is so infused with political bias as to make it nearly irrelevant.

    • OnPointComments

      How much does Thomas Piketty charge to make a speech?

  • Shag_Wevera

    Forget equality, think fairness. We need a new system built around the understanding that human beings should be absolutely guaranteed a handful of things. Food, clothing, shelter, education, and medicine. After THESE basics are satisfied the rest of society can resemble lord of the flies, or a mad scramble of rats to the top of a sinking ship. Capitalism and greed are fine if we take care of the fundamental needs of humans.
    If this is ever to happen, it will either be by enlightened evolution or violent revolution. The status quo has existed for around ten thousand years.

    • kaybee63

      I agree with this, but the question is – are there enough resources for everyone to have those basics? I really don’t know. On the one hand, I feel like everything tends towards equilibrium, like in chemistry, which would explain illegal immigration to where it’s better than where they’re coming from. So where is that equilibrium point? A middle class Chinese family is probably still less well off than a middle class American family, though they’re clearly becoming more comparable, to our disadvantage. But it’s clear that power and money tend to consolidate themselves as centuries of history and literature also demonstrate. Like so many things, it’s a lot more complex than talk radio can generally handle, although NPR tries more than most.

    • harverdphd

      10,00 years? Don’t hold your breath.

  • andrewgarrett

    And yet the inconvenient truth remains: globally the middle class is growing, the poverty rate is falling, and there has never been a smaller portion of humanity living in poverty. Thanks to globalization a billion people escaped poverty in the last twenty years, but they were mostly brown people in the developing world, so we in the rich world didn’t notice. Instead we worried that people who bought houses they couldn’t afford during the housing bubble were now only rich enough to buy one or two cars, instead of three.

    “Progressives” can’t acknowledge that humanity is becoming less poor, although 42 percent of humanity lived in dire poverty in 1990 to less than 20 percent today. The only time the Left acknowledges it is when they fret that more brown people are eating meat, using electricity, and surviving infancy.

    • northeaster17

      Progressives do acknowledge that humanity is less poor by capital standards and that poverty is still rampant. Something conservatives can not fathom without blaming the poor.
      But the world is getting smaller and growth at all costs will force us to re-evaluate all the so called progress we have made. I fear that the re-evaluation will not come at a time of our choosing.

    • Fredlinskip

      Does globalization inevitably lead to a world government where everyone is to compete on equal footing?
      Or are there ways to incentivize education and jobs here?

    • kaybee63

      Globalization is a form of wealth redistribution – all the middle class jobs we used to have have been farmed out to those poorer countries. Yet the rich still manage to stay on top, via capital appreciation, not labor, which I think may be Piketty’s point.

  • Fredlinskip

    Studying history, it seems one can conclude that redistribution to the top is not a healthy philosophy in ANY political system.
    This philosophy was in full swing before Great Recession and Great Depression.
    It was the sustaining philosophy in Monarchies such as the one we fought a revolution to free ourselves from.

    It seems we have been attempting to recreate that monarchial form in America and all of our deepest problems are rooted in this trend:
    1) National Debt- news flash- tax breaks for wealthy does not help (See Reagan admin). International Corps are incentivized to invest over seas and stow money in tax havens. Many pay zero taxes.
    2) Lowered inheritance tax- Wealth in America is more often inherited than earned than ever before
    3) Soaring college tuition- It’s become all about “pay to play”
    4) Low wages and Unemployment- This really boils down to “greed is good” philosophies;
    Jobs, in general, ARE going overseas to be replaced only by low -end service type jobs. There is a certain percentage of our population that were never meant for high-tech jobs- are these folks throw these people to be thrown the lions? (bring back the Romans).
    5) Politics- $ and lobbyists in politics, degraded further by recent SC rulings, has perhaps never been worse.
    6) public seems to becoming less informed- not more so:
    media outlets run by moguls with political agenda seem to be the rule. “Divide the public and conquer” seems to be rule of the day.

    Why are capital income gains taxed at so much lower rate than income of ordinary working Americans?
    The message seems to be- anyone stupid enough to work for wages doesn’t deserve to be compensated fairly.

  • John Howard Wilhelm

    Ten of the last eleven recessions including the latest have been
    associated with oil shocks as Professor James Hamilton of the
    University of California San Diego has pointed out. But this time
    is different given the arrival of peak oil, the maximum production of
    conventional crude oil, and very likely of both conventional and
    unconventional crude together world wide.

    In light of this, a rise in poverty and a fall in real middle class
    incomes are inevitable, an issue which both the economics
    profession and our policy makers generally are failing to
    discuss. What can be done to correct this?

    John Howard Wilhelm
    4 West Eden Court
    Ann Arbor, Michigan 48108
    Tel. 734/477-9942
    jhwilhelm at gmail. dot com

    • Jeff

      Build the Keystone XL Pipeline.

      • jefe68

        Wrong show.

        • Jeff

          If you don’t think that the high gas prices keep the poor down and that it slows the economy then you don’t understand basic economics.

          • Coastghost

            Jeff: you’ve posted here long enough to know surely that our resident Left-Liberal geniuses don’t even appreciate that inflation harms the poor.
            Venezuela had Latin America’s highest rate of inflation the entire time Chavez was in power, I assume it remains the highest in Latin America under Maduro. (Maybe progressives now believe that inflation is somehow empowering.)

          • jefe68

            Interesting that somehow you left out the market forces. Gas prices have been rising due to refineries selling more to South American nations. The notion that the Keystone pipeline would somehow stop market forces and lower or maintain gas prices is a right wing fantasy.

            Then there is the problem that the revised Keystone XL still crosses vital Ogallala Aquifer, which is a problem. We can live without this oil, we can’t live without water.

            http://online.wsj.com/news/articles/SB10001424052702304049904579516121276626720

          • TFRX

            Let’s just give away gas to the poor.

            Until then stop putting them in front of your rhetorical army.

          • nj_v2

            High prices? Wait until the fossil-fuel supply and consumption curves really start to diverge for good.

            Only so much carbon in the ground. Chasing the next bubble only puts off the inevitable. In the meantime, we pollute air and water, exacerbate climate change, obviating the possibility for future use of fossil fuels for something other than burning them.

            Right-wingers can’t see beyond their feed bag.

      • northeaster17

        Since we need oil more the clean water that’s an excellant idea.

      • TFRX

        Move next to it.

        • OnPointComments

          “But don’t you realize — that’s where I sail!” –Ted Kennedy, on building a wind farm in Nantucket Sound

          • TFRX

            Move next to it. Or a hog lagoon. Or downhill from a heap of mine tailings.

          • OnPointComments

            He can’t. He died nearly 5 years ago.

      • jimino

        How does facilitating the sale of Canadian petroleum products to China or some other foreign country help the USA?

        • Jeff

          Not building the Keystone XL pipeline sends the oil to China…they are going to build another pipeline to the Canadian west coast to ship to China if the Keystone XL Pipeline is not built. It’s incredibly inefficient to send it to the Gulf coast and then put it on a ship and send it to China…it doesn’t go to China it stays here, but you don’t really care…you just want to spout propaganda against something because you’re a CO2 fear monger.

  • SteveTheTeacher

    I have heard mainstream conservatives argue as well as Randian Libertarians argue that the wealth divide that Piketty highlights is a good thing.

    Please discuss:

    “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens” by Martin Gilens and Benjamin Page.

    (http://www.princeton.edu/~mgilens/Gilens%20homepage%20materials/Gilens%20and%20Page/Gilens%20and%20Page%202014-Testing%20Theories%203-7-14.pdf)

    They found –

    “Multivariate analysis indicates that economic elites and organized groups representing business interests have substantial independent impacts on U.S. government policy, while average citizens and mass-based interest groups have little or no independent influence.” (Gilens, Page, 2014, p.2)

    “Moreover, because of the strong status quo bias built into the U.S. political system, even when fairly large majorities of Americans favor policy change, they generally do not get it.” (Gilens, Page, 2014, p.23)

    The US government is far less repressive then many governments throughout the world. We in the US have more freedoms than people in many other parts of the world.

    Nonetheless, the US is not a meritocracy and not a democracy. The US is at best a benign plutocracy.

    What will we do to change this?

  • SteveTheTeacher

    I’d like to hear reflections on studies that use the tools mathematical and Physics to study the dynamics of economic systems such as “Towards a Physics of Economics” by Bilkas Charkrabarti and Sitabhra Singa and “Econophysics of Income and Wealth Distribution” by Arnab Chatterjee.

    From work, such as this, is seems that:

    1. Accumulation of wealth in the hands of a few is an eventual outcome in market/capitalist economies.

    2. Market/capitalist systems eventually reach a state of unsustainability do to their inherent growth in consumption of finite resources.

  • DeJay79

    almost 80 comments and the show has not even started yet.

    Boy this one is going to be a hot bed of chat!

    • OnPointComments

      The number of comments isn’t surprising. All of the usual liberal commenters gleefully embrace Thomas Piketty’s advocation that the solution to income inequality is to plunder the wealth of those who are successful. Piketty’s manifesto feeds the resentment that the Obama administration has trumpeted for over 5 years, and this administration’s demonization of those who achieve success. They believe that politicians and bureaucrats can best determine how wealth and income should be distributed.

      Luckily for us, unluckily for them, we have a constitution.

  • Coastghost

    Mankiw seems willing to credit Piketty at least for sound work in his presentation of historical data: in his historical analysis, then, how well does Piketty account for wealth creation and capital formation?

  • erictremont

    Like Joe Stiglitz and Paul Krugman, Professor Piketty believes that “rent seeking” by the 1% exacerbates inequality. I understand where he is coming from, but what about rent seeking by trade unions and public sector organizations? Isn’t that a serious problem in France, Italy, Spain, and other Western European social democracies?

  • creaker

    Capitalism is driven by inequality – winners and losers – “whoever dies with the most toys wins”. However as you reach the end game, capitalism dies.

  • http://hlb-engineering.us/ HLB

    How come nobody ever heard of this guy until the last 6 weeks? I’m awaiting his book at the library: I’m on the list, apparently it’s a big hit at the Carnegie Library of Pittsburgh system.

    • jimino

      Piketty and Saez have been documenting this phenomenon in their research on this topic for years.

  • geraldfnord

    Apologies for commenting before the show, but I might not have a chance during it:

    Dr Piketty’s prescription have been widely held to be politically unfeasible in the U.S.; if that, or even just its perception, were so, I’d be interested in what Dr Piketty might recommend we do (as we say in English) faute de mieux. Thanks.

  • Sue Leroux

    Capitalism is a religion for many. I don’t think even Mr. Piketty’s scholarship can change the minds of the 1%.

    • harverdphd

      The 1% is a myth.

      • TELew

        Or so they and their croneys want you to believe!

      • http://neilblanchard.blogspot.com/ Neil Blanchard

        Yeah – it’s 0.01% richest we have to be concerned with.

      • nj_v2

        ^ Third-string troll time.

    • nj_v2

      It’s not religion. It’s a mechanism by which the rich and powerful can game the system to take advantage of the masses.

      • TFRX

        But it is a faith system. Else how could so many working class serfs stiffs be suckered into being cannon fodder for their lords?

  • twenty_niner

    How about shutting down the greatest transfer of wealth to the .1% in human history: the FED’s QE program?

  • http://hlb-engineering.us/ HLB

    Maybe the Toms will discuss “increasing returns.” A subject dear to the heart of the author/scientist/technologist/economist/guru, W. Brian Arthur.* He’s worth a look-see.

    * Early in his career, a colleague of Kenneth Arrow. Arthur was an early adversary of the “market equilibrium” school of bandits.

  • creaker

    Economists have treated capitalism like a big meat grinder, you shove more and more into it and more and more comes out. Post WWII “capitalism” was actually a delicate ecosystem where technology, labor, unions and markets were balanced in very particular way. We may find another balance but it can never be like it was before, we’ve moved beyond it.

  • Yar

    All economics starts in the home. Much of our current economy is fiction. Render unto Caesar that which is Caesars. in other words we can abandon the economy of the 1% anytime we choose.

    • http://hlb-engineering.us/ HLB

      I usually render it with Russian dressing. Hoober Doober

  • HonestDebate1

    So much envy, so little time.

    • jefe68

      So much inanity, and way too much time.

  • http://hlb-engineering.us/ HLB

    Economic growth: Flat for the several hundreds of years leading up to the industrial revolution. Largely because when a peasant got more money {corn, firewood, clean water} he spent it having more children.. so gains were never banked.

  • WorriedfortheCountry

    Oh goodie. Can’t wait to be lectured by a French socialist.

    • http://hlb-engineering.us/ HLB

      Let us know if you find one. And what channel he’s speaking on. HD

  • TFRX

    Our guest is talking about the changes of capitalism w.r.t. science &c in the 20th century.

    Let’s not forget that another thing which saved capitalism was a useful dose of collectivism. That dose kept the Great Depression from becoming truly violent over here, and underpinned the middle class for decades.

    • http://hlb-engineering.us/ HLB

      No one ever paved their own highway. HD

      • TFRX

        Yep.

        But I’m not even talking about private roads. Those were a bust before WWI in this country–see Vanderbilt’s Highway on Long Island.

        I mean Social Security, trade unions, and everthing else which kept people from rioting in the street or starvign. The stuff which now our uberclass wants to handwave away or reform unto death.

  • SteveTheTeacher

    I appreciate Professor Piketty’s work. But his work is historic. Without the predictive framework of Mathematics and Physics, one might conclude that it is possible to achieve a more balanced distribution of wealth in a market/capitalist economy.

    I’d like to know what Professor Piketty feels about the econophysic modeling of market/capitalist economies which indicate that all such economies develop disparities in which wealth is concentrated in the hands of the richest few.

    Shouldn’t we be discussing alternative economic models?

    • http://hlb-engineering.us/ HLB

      Yes, the very one thing economics can’t do: predict anything. Hoober Doober

      • SteveTheTeacher

        Many conservatives argue that it is possible to have unending economic growth. How is such a principle possible in a world with finite resources?

        On the contrary, economies are systems which operate in the physical world and, as such, adhere to fundamental real-world Physics and principles related to “value” such as mass transport phenomena, kinetic interaction principles, etc.

        Try reading “Econophysics of Income of Wealth” by Arnab Chatterjee.

        • StilllHere

          The universe is expanding.

          • SteveTheTeacher

            Of course.

            Would you be interested in buying my perpetual motion machine?

            How about my zero-point vacuum machine that generates wealth from a vacuum?

        • kaybee63

          A little light beach reading?

  • Coastghost

    Professional economists critical of Piketty’s advocacies point to the questionability of his key premise, r > g, which poses intellectual challenges even to those of us without formal training in economics.
    In terms of “descriptive economics” (as opposed to the “prescriptive economics” so many here are so enamored of), is Piketty’s central premise accurate or no?

  • http://hlb-engineering.us/ HLB

    Still waiting on the economics papers/books that predicted high frequency trading and flash markets. But, it’s early days.

  • geraldfnord

    Too much inequality of wealth is not just a threat to democracy: it constitutes a strong threat to property rights. When a population overwhelmingly consists of people with little property to protect, those protections will seem meaningless at best and immoral at worst.
    Such a population will take measures, either democratic or involving pitchforks, torches, and (in the U.S.) automatic weapons.

    It was the genius of the post-war boom that it was understood that

  • rcc

    transparency is good but does it change out path down this road? how do we keep capitalism but not kill the golden goose

    • http://hlb-engineering.us/ HLB

      Keep the capitalism, I’ll keep the goose. HD

  • geraldfnord

    It wasn’t just the post-war boom that induced our upper classes to accede a more equitable deal to the middle and even the lower classes: it was the threat of Communism’s gaining more than its small toe-hold in the U.S.. They were willing to accept a bit less power and substance as insurance against losing all they had.

    Without a credible threat from the anti-propertarian side—even the Democrats hebephrenically derided as ‘socialist’ have no basic quarrel with the idea that certain behaviours (working, inheriting, getting lucky) should mean that some should live much better than others—they have no incentive to be reasonable.

  • http://hlb-engineering.us/ HLB

    We’ll all get rich taking in each other’s laundry.
    –The Fundamental Rules of Free Market Capitalism

    The 1st rule of which is suspend all disbelief.

  • Paul Meade

    Dr. Piketty’s book is on my short list for future reading as well as Matt Tabbi’s “The Divide” both speak to power and corruption.

    • StilllHere

      Both appear to be drawing large conclusions from extremely small data sets.

      • Floyd Blandston

        Piketty’s book is excellent, and fundamentally sound. Read it before you critique it.

        • kaybee63

          I plan to, and now maybe I’m just being gullible, but did you really read it in French?

          • ToyYoda

            It seems like one of those cool projects I wish I could do, if I had more time. Read a great book written in the original language, especially in a language you don’t know.

            I think this book would be a good choice, but I personally would choose to read the collected works of Henri Poincare or even the essays of Montaigne.

          • Floyd Blandston

            Couldn’t wait for the translation- he’s been on the radar for a decade- and his prior translated works were a foundation for this one. A star economist for the changing times…

          • kaybee63

            Impressive. I can read a menu in French…..

          • TFRX

            I can’t even find la bibliotheque avec fromage in French, and you’ve read a serious geeky treatise in it.

            Kudos.

          • Floyd Blandston

            It’s really not ‘geeky’. Part of his great ability is to cover economics in a fully professional, yet accessible manner.

          • TFRX

            I guess I meant that the combination of my (lack of) French and the subject matter would be beyond my scope.

            I can probably get through it in English, but will have those little sticky papers referring to the bibliography and reference notes.

  • TFRX

    “I have a dozen friends who are millionaires, and none of them were born that way,” per the caller.

    Where’s the median of your friends, caller? What’s the proof behind the Horation Alger story he’s trying to give us?

  • OnPointComments

    Like the caller, every millionaire I have ever met made their wealth on their own through their own hard work and ingenuity.

  • Yar

    Ask about disruptive technologies like the printing press, (Vulgate bible) or social media(Facebook). How does technology affect the capitalistic model. I would also like to know Thomas Piketty’s view on the economic basis behind Jubliee. Is the practice a peaceful reset to the economy.

  • http://hlb-engineering.us/ HLB

    When most of Florida is underwater* which “market equilibrium” goody is at work here? Everybody WINS!

    * Global Heating, one of Mother Nature’s market forces.

    • geraldfnord

      It’s no coincidence that some of the more extreme free-market fans are seriously interested in minds-uploading and reincarnation—I think they have the secret intuition that their system were flawed unless _all_ insults were remediable, death included.

      As it is, let’s also wait for market forces to increase the intelligence and health of those deprived of protein, warmth, and care in their early years…I’m not holding my breath waiting, death not being remediable as yet….

  • Coastghost

    r > g: true or false?

  • http://hlb-engineering.us/ HLB

    The universe is 0.0001% economics. The tiny remainder is externalities.

    Long live the academy! A kiss on both cheeks to you scholars.

  • ThirdWayForward

    It is naive to think that humanity has seen its last world war or inequality-provoked revolution.

    Major, world-wide wars occur about once a century, as differential economic growth forces redrawing of political and military boundaries. We are due for another one in the coming decades.

    Capitalism, private ownership of profit-making enterprises as distinguished from markets per se, which are distribution/trade systems, is an inherently unstable system.

    Great inequality eventually destabilizes financial systems, and the result is usually a resetting of the concentration of wealth. The recent great recession did not do this, and wealth concentration is still near historic highs. However, the system is still unstable — the middle class cannot buy the output of the economy and the risky, dark financial markets have still not been tamed — we very well may see another crash, one that does reset the balance a bit (but at everyone’s expense and suffering).

    We like Piketty’s proposal of a progressive wealth tax.
    The tax on wealth is overdue. Our national debt should be apportioned according to wealth, beginning with net worths of $5 million or more.

    • OnPointComments

      I’m going to guess that you chose a starting point for the apportionment of our national debt that excludes you from getting an allocation.

      • ThirdWayForward

        Five million is way, way above where I am — is this a serious suggestion that it should kick in way, way lower, say at $50,000? That could be done if other reforms of the income tax were enacted (tax capital gains in the same way as regular income, eliminate carried interest).

        The richest 1% own 35% of the nation’s wealth. However, when you exclude ownership of primary residence, this figure is much, much higher. They own and control almost the entire economy. In historical terms, they are paying smaller percentages in taxes than they have in recent decades.

        The principle I used to come up with the figure is that, as with the income tax, there should be a minimum amount of wealth that is non-taxable — $5 M is a generous estimate of how much wealth one needs just to sustain living (own a home, a car, educate one’s children, support a family). The estate tax exclusion is roughly $5M.

        A 1% tax on wealth above $5 million in personal wealth would pay off the national debt in about 30 years.

    • geraldfnord

      I would suggest that the minimum wealth subject to the tax be set by the amount necessary to hold to reap (say) an upper-middle-class income for the current r…to me the ‘wealthy’ are defined by their freedom to try as they will (not ‘do’, as there is no ‘do’, only ‘try’, no matter what a newage muppet might have told you) with the assurance that they will not live badly.

      (Improved, smart, non-militaristic police protection for the poor would also help—penury should be a problem for one, not a death-sentence or its threat.).

  • http://hlb-engineering.us/ HLB

    Oh, goody. Just what the planet needs. Another George Bush “adviser.”

  • http://hlb-engineering.us/ HLB

    We will be greeted as economic liberators. Canapes and champagne for all.*
    –All of the George W. Bush advisers

    * Except the local Muslims {who don’t sip alcohol and found little to cheer about}

  • OnPointComments

    I still find it astonishing that there are so many people who, when asked how to address the gap in wealth between the rich and the poor, emphatically say the solution is to make the rich poorer. Being an optimist, I’ll look on the bright side and be thankful that they weren’t able to craft a solution to the healthcare gap that required those with good health care to be injected with hepatitis.

    • TFRX

      Submitted without comment.

      Well, except that I hope you’re rich enough to not be some idiot carrying wealthy peoples’ water.

      Rich folks were rich enough before the last recession. They didn’t get poorer. THey were rich enough before the recovery before that–yknow, the one that we all read about, but very few of the middle and working class got raises during.

      This is not the natural outcome of things, but the result of the thumbs they’ve placed on the scale. I’d say “don’t be their bitch”, but I think it’s too late for you.

      Demand is the problem in the economy now. Because the non-rich have been more productive than ever (over the last ~15 years) and have no extra money to show for it. And the extra money the rich have been getting isn’t going anywhere because they don’t have any more goods to buy. They’re tired of buying one more Learjet timeshare, luxury auto, or such.

      Simplified? Yes, somewhat. But you’re really out there.

    • anamaria23

      Would having four homes instead of five or not having one’s underwear hand made in Paris really make one poorer?

      • OnPointComments

        Would having four homes instead of five or not having one’s underwear hand made in Paris really make the poor richer?

        • anamaria23

          Done right, it could.

  • http://hlb-engineering.us/ HLB

    We will all find happiness canoodling with each other’s wives.
    –The First Rules of French Society

  • rcc

    taxing wealth maybe, but who decides where or who the tax money should goes to?

    • http://hlb-engineering.us/ HLB

      The tax money all flows to the black hole at the center of our galaxy — Washington, D.C. It can’t escape due to the intense gravity of all that matters there. Hoober Doober

    • TFRX

      There’s a good conversation to be had on this. But let’s start with the basics: Paying the obligations already incurred. (See: Every “fiscally prudent” stoppage of the government when the right doesn’t want the government to pay its bills.)

  • Coastghost

    Tom Ashbrook: don’t gush over Piketty’s current popularity overmuch: The Celestine Prophecy was once a stunning bestseller, too, The DaVinci Code was another bestseller in its day. (Markets move in mysterious ways.)

    • OrangeGina

      good point, but those were novels and this guy wrote a economics book. I’d say interests of the populace move in mysterious ways.

      • Coastghost

        As Mankiw points out, Piketty’s fanciful prescriptions and diagnoses lead his work straight away from salient economic history to speculative nonsense more fitting for a Dan Brown or a James Redfield novel.

        • Floyd Blandston

          Did you read it? I did…

          • Coastghost

            Neither in French nor in English, but then I find ‘Pataphysics more compelling a subject than Piketty’s prescriptive economics.

          • Floyd Blandston

            So nice to hear you admit to strong negative opinions on that which you do not know- fully affirming.

          • Coastghost

            Slight mischaracterization: I have not read Piketty’s book, but from the comments accumulating here from his admirers, reading Piketty’s work itself affords no guarantee of comprehension.
            My strong negative views of Piketty’s effort are informed by my reading of informed digests expressed by trained economists (I consult Cowen & Tabarrok’s Marginal Revolution blog regularly, even though most of the technical analyses offered there are utterly beyond me).

          • Steve__T

            “I consult Cowen & Tabarrok’s Marginal Revolution blog regularly, even though most of the technical analyses offered there are utterly beyond me”

            It seems so is this.

          • Coastghost

            Well, you see I tried posing a technical question, “is Piketty’s assertion that r > g accurate?”, for all the response I got for my troubles.

    • nj_v2

      ^ On a real roll today. Earlier, suggesting suing cell-phone manufacturers for misuse of their products while driving, now comparing serious academic work to mass-market fluff.

      This is what right-wingers have to resort to when they can operate on substance.

      • Coastghost

        Well, Ashbrook & Co. are not addressing my prior query: is r > g, as Piketty contends? Many economists don’t agree with Piketty’s contention, apparently for very good reasons.

        • Floyd Blandston

          Self interest. Incorrect- read the book.

      • Floyd Blandston

        Picketty’s book is even better in the original French…

  • Bigtruck

    A reasonable re-distribution of wealth has historically never been a peaceful endeavor.

    • TFRX

      But you’re forgetting Step B:

      Pretending it was peacefully done afterwards, rather than having the dragged-kicking-and-screaming scene.

      See: Any corporate image ad everywhere bragging on their number of employees and “good jobs”, pretending they’re just giving wages away.

  • http://hlb-engineering.us/ HLB

    All wealth leads to war.
    –Maynard Marx Friedman von Hayek

  • Jill122

    Sure at $7.50 an hour one can afford a 10% drop in income to set aside for the future. That’s reasonable — if we lived in a third world country. It’s the fault of the poor that they are not accumulating wealth. Thank you Mr. Republican.

    • HonestDebate1

      Why would any sane person work for minimum wage? What kind of loser grows to be an adult without nurturing the skill to warrant more?

      More importantly, who has convinced people they are worth only what the government decrees? Thank you Mr. Democrat.

      • Ray in VT

        Right. People ought to have the right to work for as little as the market deems, and if the market deems some people worthless and unworthy of being able to afford even basic necessities, then that’s just the price of liberty. Sounds like an awesome situation. I’m sure that it was great for such people prior to the New Deal, before FDR stole their right to work for next to nothing.

        Plus, because income is supposedly a choice, then obviously these people are just lazy or stupid or something, right? They choose to be poor.

        • HonestDebate1

          Exactly!

          [edit] Your ability to invent gibberish no one said is beyond reproach. How do you do it? Or more to the point, why?

          • Ray in VT

            Feel free to live in the Gilded Age with your out of whack ideas if you want. I’ll willing to bet that you’ll find relatively few people willing to take that bargain.

          • HonestDebate1

            They were simple questions.

          • Ray in VT

            Indeed, simple questions that provide much insight into your whacked out positions.

          • Ray in VT

            Lame.

            I guess that pointing out how much crummier it was for many workers prior to protections such as the minimum wage or that it was government, and not the free market, that brought such reforms into being isn’t relevant.

            I think that that addresses the mind-numbingly absurd nature of your vapid comments, and the low level thinking that contributes to stances such as yours on matters such as this.

          • HonestDebate1

            What’s that got to do with my questions which did not advocate changing squat?

          • Ray in VT

            Just a response to how conditions have gotten better for workers since the inception of what you have called an abomination.

            Care to take a stand? Surveys show that there is strong support for raising the minimum wage. Should it be increased, stay the same or not exist? Here’s your chance to really take another proud stand for 19th and early 20th century policy.

          • HonestDebate1

            Answer my most excellent questions without absurdly crediting the minimum wage for saving the universe or claiming I want to go back to Dicken’s days and I’ll be happy to repeat for the gazillionth time my stance on the Minimum wage.

          • Ray in VT

            If I could ever find where you had posed an excellent question, then I would certainly attempt to answer it. However, if you want to just label millions of people as not sane or as losers without regard to both societal and individual conditions that exist that contribute to such things, then such comments are about as useless as your usual claptrap.

          • HonestDebate1

            Yea right, that’s what I said…. NOT. My questions are simple and valid. You cannot answer them because the truthful answers contradict your ideology. There are not millions of people working for minimum wage. Of those who are, the vast majority of them are kids doing low-skilled entry level jobs. The few adults who are able-bodied and skill free with no work-ethic are losers. A hike of the magnitude Obama advocates does nothing but kill jobs and hurt the poor. It doesn’t stimulate squat. It is nothing but an emotional non issue to allow idiots to scream about nasty Republicans wanting people to starve. It’s stupid as hell. You are not a serious person.

          • HonestDebate1

            Lots of questions you refuse to answer are simple. but you can’t answer for ideology:

            How can affirmative action work without judging by the color of skin?

            What is it about being black that makes it harder to obtain a valid ID?

            If intent to deceive is not required to be lying then how can you claim Obama didn’t lie about the stupid video? I ask that without bringing up the smoking document revealed yesterday that proves it was invented for political purposes.

            And on and on. You are not a serious person.

          • Ray in VT

            Hey, feel free to live in whatever fact free, ideologically simple minded little cave that you like. Comments such as yours just show how disgustingly mean-spirited, hateful and bigoted American conservatism has become. No wonder you like turds like Limbaugh.

          • HonestDebate1

            Oooo the Rush monster. Oooo the emotional vacuous non-response. Oooo I’m heartless. Oooo your compassion is so noble despite your advocating holding down blacks, killing jobs and your insulting the intelligence of an entire race. Ooo those nasty Conservatives wanting to actually address the root causes instead of giving lip service.

            Obama has you just where he wants you.

          • Ray in VT

            Your despicable comments about the poor and racial minorities are well established. It must be sad for you to be so small that you feel that you have to denigrate others to make up for it.

            I think that southern conservatives have been the most successful in “holding down blacks, killing jobs and insulting the intelligence of an entire race”. It’s just too bad that the big, bad feds have tried to steal their rat to do it.

          • HonestDebate1

            I’m not the one saying blacks are too stupid to get an ID and need standards lowered for college admission.

          • Ray in VT

            Neither am I, and neither are most of the people to whom you ascribe such beliefs. You are, though, on the record promoting white supremacist “research” on race and crime, but you’re totally not prejudiced. Maybe it’s just that the New Century Foundation and its fans are the only ones brave enough to tell us how scary and dangerous black people really are.

            http://www.youtube.com/watch?v=2nGw_vAnqPI

      • TFRX

        You need to get out more.

    • StilllHere

      Americans making more than $34,000 fall in the top 1% of global earners. Hmmm, but I hate the 1%.

  • WorriedfortheCountry

    Generational wealth? Ah, the author must be intimate with the Kennedy clan. This could explain his focus on the negative impact to society.

    • http://hlb-engineering.us/ HLB

      “JFK cut taxes to bump us out of a recession.” –The Heritage Foundation

    • geraldfnord

      Yes, generational wealth is so bad that it can make even decent Democrats behave as badly as rich people have always behaved.

      I have never met a rich person with much of an ability to feel shame; and they strongly resent when.the lower orders it’s supposed to keep in line attempt to turn it against them.

    • Ray in VT

      Compared to the Waltons or the Kochs they are small potatoes.

      • WorriedfortheCountry

        Well, the Kennedy’s have been around longer — more generations. And I really don’t see the Koch’s or the Walton’s making a career out of taking away our liberties via “the state”. In fact, the Koch’s spend their political capital attempting to increase personal liberties by reigning in the power of “the state”.

        • TFRX

          Hahahaha.

          Wow. In a bubble much?

        • Ray in VT

          Yes, liberating us so that we have the right to have formaldehyde in our products, liberating us from the oppression of environmental regulations, of which they have so often run afoul, and providing us with the freedom to have so many of our laws churned out by corporate interests via ALEC. They can take that liberty and shove it as far as I am concerned.

  • Human2013

    Did the Harvard trained economist just tell us that our 401ks give us Capital?

    • http://hlb-engineering.us/ HLB

      One day we’ll all live happily on our 001ks, thanks to Bernanke bucks. HD

    • Human2013

      A system that has no transparency and so many fees. In 10 yrs of having a 401k I’ve seen almost no gain above inflation, meanwhile Berkshire had a 30 percent return…..hmmmmm

      • StilllHere

        That says more about your investing expertise.

        • Human2013

          NO, my friend….It says more about the fund administrator.

  • Jill122

    Democrats in this country have long believed that Republicans would love to see us turn into Somalia. So Mr. Piketty with all due respect, he’s likely not to admit it, but very likely to want it.

    • StilllHere

      Republicans have long believed that Democrats want to see us turn into South Sudan.

      • Jill122

        I guess originality is just not your schtick.

  • Adam Philipps

    I see this more as a problem as not moving towards inequality , but moving towards efficiency. The middle class is losing more to computers than it is to corruption, I here story’s every day about more, and more jobs being lost, do the fact, that a computer can do it better. And with the advent of quantum computing, “her” like ai( capable of creative thinking) could be on our door step in about 15-20 years. Ive herd statistic from the industrial revolution, that 90 % of the jobs that were needed at the time went away, and it’s looking like we will lose another 90% to this revolution. How many more cuts can we take before machine’s are doing every thing the middle class can do but much better? I can’t see a future for capitalism if all our jobs are going to be out sourced or turned over to the computer.

    • Steve__T

      And those who build and repair computers, get replaced by computers….Dose Science Fiction becomes Science Fact?

      • Adam Philipps

        Actually they have talked about stuff like this on “Ted talks” robots that repair, and build other robots, and robots/ ai that can self repair, It’s scarey how quickly science fiction is becoming fact.

  • geraldfnord

    Some people get off on the idea of their having much better lives than others…given that, the pseudo-scientific and moral justifications follow on, those who consume them can certainly pay for the stroking…I like hergbert Spencer much more than his fans.

  • OrangeGina

    oh please. They want auto-enrollment in 401K so the financial vultures can get their hands on more fees!

  • Yar

    When the “bottom” is 60+ percent of the country, it is everyone’s problem. You can’t simply take care of yourself and survive.

    • http://hlb-engineering.us/ HLB

      We’ll all get to the top shoving, screaming, and booting ourselves atop each other’s shoulders. Everybody WINS!

      • Yar

        Weeping, wailing and gnashing of teeth!

  • http://hlb-engineering.us/ HLB

    Corporations are people, my friend.
    –Mitt Romney

    Soylent Green is people!
    –Charlton Heston character

    And thus the economic math of the situation makes clear: corporations are food snacks.

    • OrangeGina

      corporations = people;
      Soylent Green = people;
      so it must be that corporations are Soylent Green.

  • http://neilblanchard.blogspot.com/ Neil Blanchard

    Mr. Mankiw is avoiding the main question: an economy *has* to stay stable in order to continue to work, and when the poor are 9 meals away from revolt, then that economy is fatally flawed.

    Most people are so far away from contributing to a 401K, it is almost laughable to suggest this as a possibility; let alone a solution.

    Money has bought the strings of power, and is taking over the basic mechanics of our democracy.

  • kaybee63

    If Mr. Mankiw believes in education and infrastructure, as do I – how does he propose to pay for it except with some kind of tax?

  • Phil Freeman

    Tom, this is an interesting show, but both of these economists – one from the “left” and the other from the “right” are missing the most important point. That point is that on a finite planet, growth cannot continue indefinitely. For the benefit of future generations of both humans and of non-human life, we need to come to terms with that. I suggest you have on your show an economist like Herman Daly who can talk about a steady state economy.

    • napoleon75

      This thinking is so flawed and proven so wrong. services have become a majority of the economy .

      • dweebus

        The reason services are now a majority of the (US) economy is that we chose to export our productive economy to countries with lower wages and regulatory costs. Globalization is essentially an arbitrage scheme. That still does not change the fact we are constrained by hard physical limits. You cannot have infinite growth on a finite planet. It takes energy and resources to make those snazzy smartphones that enable your “service economy” to exist and fossil fuels to power the servers that drive them.

        “The greatest failure of the human race is an inability to understand the exponential funtion.” Albert Bates

    • SteveTheTeacher

      Thank you Phil.

      It would be great to hear OnPoint do a show featuring those such as: Herman Daly, Manfred Max Neef, Michael Albert, etc.

    • Human2013

      Congrats, you win Comment of the day.

  • http://hlb-engineering.us/ HLB

    Don’t tax you
    Don’t tax me
    Tax that feller behind the tree.
    –Huey Long, Governor of Louisiana*

    * Before he was assassinated on the capital steps in “Red Stick”.

  • Floyd Blandston

    Sooooo great to hear a GOP toady like Mankiw have to argue a top flight continental classical economist like Picketty- “…..and the horse you rode in on #$%hole.”

  • http://hlb-engineering.us/ HLB

    We’ll all stay serene and calm
    When Donald Sterling gets the bomb.
    Who’s next?

    • Floyd Blandston

      Would you please shut up.

      • hennorama

        Floyd Blandston — there’s a very handy minus sign, far to the right of the screenname, that will [Collapse] the thread. It appears whenever one puts the cursor anywhere in a comment.

        • Floyd Blandston

          Many thanks…

          • hennorama

            Floyd Blandston — you’re very welcome.

      • Human2013

        With the exception of a few, we try to stay respectful in this forum.

        • Floyd Blandston

          I said please… ;)

  • Jaki Reis

    Let’s get it straight. Wealth inequality is due to accumulation of profits at the cost of the workers who make the products and sales that make the profits possible. So. You can’t have it both ways. If your profits are not being shared with your company’s working members to at least the degree of affording them a living wage, so that they are reliant on the government taxes for food and medical care – living requirements – then the government has the right to take enough money from your corporation to cover those expenses.

    • OnPointComments

      Do you, Jaki Reis, have a positive net worth? If you do, you are wealthier than the poorest quarter of U.S. citizens combined. Did you accumulate your wealth at the expense of the workers?

      • StilllHere

        How else would she get it?

      • pete18

        She’s part of the plutocracy.

  • Lector

    The reason inequality is a threat to democracy is not economic. It’s political. Factions and leaders (politicians) will use inequality as a tool to amass power (class warfare). We’ve seen it time and again throughout history, and we’re seeing veiled hints of it in the political dialogue in the US today.

    Wealth redistribution is a temporary political solution. It works to get certain people elected. If continued, it might benefit as much as a generation, but it is not a permanent solution. In the long term, it simply makes one portion of the population dependent on another portion. It requires that “those who can” continue to produce disproportionately in order to support the rest.

    As an aside, Piketty’s suggestion that it’s better to tax “net wealth,” is simplistic. If I choose to pay off my mortgage, and you choose to drive fancy cars and take vacations, why should I pay more taxes than you?

    • StilllHere

      This is about the government becoming the tool of redistribution, employing those otherwise unemployable, and creating a class of kleptocrats.

      • nj_v2

        Hahahahaha!!

        • StilllHere

          I’m sure you’re cashing government checks.

    • TFRX

      Dependent on another?

      SOme would say the people who’ve been working and more productive without the paychecks to show for it are the ones who the rich are dependent on. They’re dependent on us not rising up, remaining placid, voting (some of them) against self interest, and taking what’s been earned as if it’s been given to us.

      • Lector

        I don’t know who expects you to take what you’ve earned “as if it were given to [you].” If you’ve earned it, you should should take it proudly. The question is whether you will allow someone to convince you that you’re due more than you’ve earned. That’s the basis of the argument for wealth redistribution.

        It’s very comforting and less mentally stressful, especially when things aren’t going well, to blame someone else. That’s the row the Democrats are trying to hoe. They’d like you to believe that the reason labor force participation is at historic lows and jobs are hard to come by is because Jamie Dimon or Warren Buffet makes too much money. They hope that you’ll vote for them if they promise to take some of that money and give it to you. That’s a very appealing argument to a lot of people.

      • Human2013

        Unprecedented gains in productivity, no increase in wages. Inflation, no rise in wages. Longer hours, no pay raise. Forgoing children, no more money. Sacrificing happiness, a reduction in pay……

  • https://www.linkedin.com/in/williamcornwell William Cornwell

    When Makiw says that the real problem in America today is not inequality but, for instance, our educational system, he demonstrates how he fails to see the interconnections between inequality and so many other issues. As the rich become richer over time, move into wealthy enclaves, capture the political class through campaign contributions in return for tax cuts for the rich, and leave behind a shrinking middle class and a growing lower class, the resources available through local property taxes for the public school districts that serve poor and middle-class families withers. Meanwhile, the rich can afford to send their children to the finest private schools, and the privilege of wealth is passed on to the next generation as surely as in the days of European aristocracy.

  • Charles Aulino

    The viewpoint expressed by Prof. Mankiw strikes me as denial of facts and historical data.

  • Alan Emsley

    I do not understand why the Harvard prof treated this issue as “binary”. That is, why not accept that economic inequality is dangerous AND education is key to capital success. Prof Piketty seems perfectly willing to do so. Our US position is much too defensive

  • dweebus

    Way back in the 80s, when I was a young lad, in my first poli. sci class, we looked at inequality. When societies reach extreme polarization in wealth, they destabilize, and you face turmoil, revolution, and in a worst case scenario they self-destruct. For example, the Senators availed themselves of vomitoriums and gladiatorial combat, the Visigoths gathered on the border plotting sedition. The French Revolution is another example. As is the Arab Spring.

    If we reach a point where a preponderance of the vaunted Main St of the US becomes the “formerly middle class”, whilst the 1% live in opulence, off their ill-gotten gains, all bets are off.

    “A corporation, essentially, is a pile of money to which a number of persons have sold their moral allegiance.” -Wendell Berry

  • debhulbh

    There is most certainly an absolute wealth accumulation in the United States and for the M. Mankiw to say that there is not, is mind boggling!
    The wealthiest have enclaves all set aside for themselves, they have vacation enclaves whereby access to same is limited to only those who can afford the 180-200 THOUSAND dollar membership fees (on top of that a cost of $1000 per night is charged to stay at same…check out Luxury Resorts of the World). The wealthy have their own clubs whereby they dine, they have speakers come to these private clubs to entertain them in the (finer) arts, surrounded by opulent furnishings, paintings, finery, jewels dripping from them and yet outside men and women go homeless.
    It blows my mind the gap, the difference. All men, all women and yet the poorest invisible to the wealthiest.
    I would love to see those over indulgent wealthy folks, set aside a day to live on the street….just ONE day (ALL OF THEM) dressed as a homeless person and see what it is like living a hell like that. COuld they then indulge themselves without wanting to put their money to actual good use for ANOTHER DESERVING NEEDY person.
    It is all very well to have (some) money (having worked hard for same), yes of course enough to have a nice life, a good life, to want to help your children/family etc. However nobody can tell me that paying 180-200 Thousand dollars for membership to a vacation club, or pay 300 thousand dollars for membership to a golf club (Dedham), that that is OK ?!! or somehow, someway normal?!! or somehow fits in with the society that most of us live in?!?! I fail to see that.
    The indulgence, the over indulgence, the self-absorption, I find this to be unconscionable, sickeningly greedy.
    And that is where the problem lies, the Gap between the haves and have-nots is simply enormous, it is an outrage and is incomprehensible to me that people would be so indulgent of themselves and so far removed from most others difficult lives and yet continue to indulge themselves.
    I simply don’t get it.

    • OnPointComments

      We can either have freedom, including the freedom to spend one’s own money for any legal purpose one chooses, or we can have a country where the debhulbhs and her ilk decide which purchases are too extravagant, and the point at which a person has earned enough. I’ll go with Option 1.

      • debhulbh

        Spoken as a true 1%…

        • OnPointComments

          I’ll assume that if someone speaks like a true 1%er, the accent is most likely French.

          • debhulbh

            Ah… you of little faith….in humanity

          • OnPointComments

            To the contrary. You’re the one who expressed skepticism of humanity.

          • debhulbh

            Different take, different angle. Very different! yours and mine. C’est la vie.
            I choose humanity. That caring for humanity, ‘for others’ side… every time, always.

      • https://www.linkedin.com/in/williamcornwell William Cornwell

        That’s a false dilemma. As Piketty explains, he is advocating a higher, but not a 100%, tax rate on the rich to help increase social mobility and reduce social inequality in this country. At present, there is less social mobility in America than in many allegedly “socialist” European countries. One might think that would be a cause for alarm for conservatives who believe in the American Dream.

        • OnPointComments

          Piketty is advocating a confiscatory, punitive tax rate on the rich.

          Which socialist European country do you propose that the U.S. become?

        • pete18

          “As Piketty explains, he is advocating a higher, but not a 100%, tax rate on the rich”

          Not 100%, well that’s certainly generous of him. For a moment there I thought he was suggesting something punitive.

          • https://www.linkedin.com/in/williamcornwell William Cornwell

            Language does matter. The point of progressive taxation is not “punitive.” Being rich is not a crime that needs to be punished. Rather, the point is to ensure that everyone in the richest country on Earth has a fair chance to live a decent life.

          • pete18

            That’s a nice sentiment but what does it mean in practical terms? The “rich already pay 70% of the federal tax burden, how much more do they have to pay before they have helped arrange this result? What your measurement of a “fair chance?” What is a “decent life?” How will we know when we’ve arrived? Is it access to opportunity or equal outcomes? If higher taxation on wealth helps reduce the income gap but also reduces growth and opportunity, is that a positive or a negative trade off?

    • Steve__T

      That may be because you are a human who loves and appreciates humans. There is no way to know why money and influence gain so much power over the human soul.
      Throughout history we have all sought it fought for it died for it. We have also been told by almost every religion wealth has no place in the heavens.
      “Gold will steal your soul and greed will never fulfill your needs”~ ST

  • jimino

    Globally deployed capital owes no allegiance to any country. It is no coincidence that those in control of it would flock to a country where they get to enjoy the greatest amount of protection collectively created while paying the least amount for that security.

    And spending more of that wealth to help others by, for example, helping them get a better education, is utterly contrary to that plan.

    • Sy2502

      Tell that to Bill and Melinda Gates, who have helped more people with their charity than you can even understand.

      • Human2013

        Don’t be fooled by Bill and Melinda. They are completely complicit and have aided in this disaster. They are protecting their legacy and looking for the adoration of liberals.

        • Sy2502

          I see, so there’s no winning really. If you are rich and you don’t contribute to charity you are a selfish pig, and if you are rich but put much of your money in charity you are still a rich pig. Sounds reasonable.

          • The poster formerly known as t

            Accumulating far more wealth than you could possibly enjoy is fundamentally selfish. Him giving away billions while still remaining a billionaire shows how much excess wealth he has.

          • Sy2502

            Accumulating far more wealth than you could possibly enjoy is fundamentally selfish, but wanting to take away their money instead of earning it yourself isn’t? Interesting…

          • The poster formerly known as t

            There is no need for any human to earn a billion dollars a year. There is nothing anyone could do as work to earn that much in a year. Billionaires make their money by taking credit for the work of lower status grunts. In capitalist markets, and in highly stratified societies, there is a tendency to glorify management and to degrade both the work and worker and then blame the worker for his/her problems..so, no, working more hours at a job or three is not how most gain the rights to consume more resources . The way many people end up gaining the right to consume more resources is by developing pyramid schemes and confidence tricks.

          • Sy2502

            Your early 19000s “class war” rant is quaint the way silent black and white movies are quaint. Unfortunately history has shown things to be quite different . Smart people learn from past lessons in order to not repeat the same mistakes. Capitalism is the economic system that has produced the highest standards of living. Communism produced equality in the sense that everybody was equally miserable (except the elite which still found a way to amass riches). I for one am smart enough to know which is more desirable.

  • Human2013

    Note to Harvard: Mr Mankiw is seriously undermining the credibility of your Economics department

    Oh wait, you didn’t hire him for his thoughts did you. It was his political connections.

    • StilllHere

      I believe your post went straight to Harvard’s president. A reply will be posted soon.

      • Human2013

        Let us hope so.

  • debhulbh

    .

    • OnPointComments

      .

  • twenty_niner

    Capitalism only works when incentives are structured to drive innovation. New inventions lead to new industries and jobs to support those industries. Right now, the incentives are structured to accumulate assets, not to innovate. This is a result of the financial system being flooded with trillions in printed money from central banks.

    Money in that volume doesn’t go into a mattress or even a boring bank account (especially when interest rates are near zero); it chases assets: equities, real estate, and even farm land. As money piles in, prices inflate artificially, the assets become momentum plays, inviting even moar momo. Newly printed dumb money chases dumber money. Broad indices show that the .1% are doing fine, but the core of the economy is rotting.

    This Keynesian-central-bank-printing crack fest is rapidly proving to be the worst economic policy in human history.

  • Sy2502

    Equality of opportunity does not mean equality of outcome.

    • Ray in VT

      Is someone proposing some sort of equalized outcome when it comes to incomes?

      • Sy2502

        Actually yes, that’s precisely what it seems.

        • Ray in VT

          Really? So what tax rate can we expect to have applied to the likes of the highest paid MLB players, such as those listed here http://en.wikipedia.org/wiki/List_of_highest_paid_Major_League_Baseball_players so that they can be brought down to the median income, for instance? If we take the median U.S. household income as being roughly 50k and look at Cliff Lee’s MLB salary of 25 million, then to equalize the two that would require a tax rate of about 99.2%. Is that being proposed?

          • Sy2502

            Why would we want to tax somebody who makes a lot of money to bring him down to median income? Oh right because, as I said earlier, some people want equality of outcome. That’s called Communism, we have already tried it and found out it doesn’t work.

          • Ray in VT

            Hey man, you’re the one saying that equality of outcomes in terms of income is what seems to be being pushed, so, is such a tax policy that I calculated being advanced, and if so, then by whom? Is Dr. Piketty advocating such a rate?

          • Sy2502

            I have no idea what point you are trying to make and how it relates to my post.

          • Ray in VT

            I am attempting to learn from you who is proposing equality of economic outcomes, which you said above it seems that someone is attempting to achieve.

            You: Equality of opportunity does not mean equality of outcome.
            Me: Is someone proposing some sort of equalized outcome when it comes to incomes?
            You: Actually yes, that’s precisely what it seems.

          • jimino

            Are you only able to communicate in non sequiturs?

          • Sy2502

            Are you able to give a meaningful contribution to the conversation? If not, please go somewhere else.

          • TheGettus

            Pikkety repeatedly states that total equality is not the goal, were it even possible. That herring stinks.

        • https://www.linkedin.com/in/williamcornwell William Cornwell

          No, Piketty explicitly said in the interview that inequality can serve useful social purposes, such as incentivizing hard work. Too little inequality, as would theoretically exist in communist societies, is a bad thing, but so is too much inequality.

          Many of Piketty’s critics on this board engage in the straw man fallacy by claiming that if he’s not in favor of laissez-faire capitalism, he wants communism. That’s wrong. He favors a mixed economy, which is what we’ve had since the Great Depression, but Piketty thinks we haven’t got the right mix between unrestrained capitalism and a state that uses progressive taxation to provide economic opportunity and social mobility to all citizens.

    • https://www.linkedin.com/in/williamcornwell William Cornwell

      When the bottom half of the population has 2% of the national wealth, then do you really believe that kids born in this country have “equality of opportunity”?

      • Sy2502

        According to data, Americans have as much opportunity for social mobility as the ever had. The fact a certain side of the political spectrum tries to make people think it’s not the case doesn’t change the data.

        • https://www.linkedin.com/in/williamcornwell William Cornwell

          I didn’t claim that rates of social mobility had changed, but the data show clearly that children do not have equality of opportunity, as the authors of a recent study on social mobility noted:

          “For all the continuity over recent decades, the authors emphasized that parents appeared to cast a longer shadow over their children’s lives, in some ways, than before. As inequality has risen, pushing the rungs on the income ladder further apart than they once were, the average economic penalty of being born poor has grown over time.

          “’It matters more who your parents are today than it did in the past,’ Mr. Chetty said.” (http://www.nytimes.com/2014/01/23/business/upward-mobility-has-not-declined-study-says.html)

          • OnPointComments

            You falsely equate equality of opportunity with the wealth of the parent or parent. Far more consistent and accurate indicators of income mobility are:
            • staying in school and graduating from the highest level of school;
            • don’t get married until after you have finished your education;
            • don’t have children until you’re 21 years old and married;
            • take a job and hold it.

          • Sy2502

            I am 5’6″. I am not tall enough to be a basketball player. Therefore I lack the opportunity to become as rich and famous as a basketball professional. Should the government do something about it?

          • jimino

            Logic ain’t your strong suit either.

          • Sy2502

            Please stop trolling.

        • TheGettus

          Source(s), please? Every study I have seen over the past decade shows the opposite.

          • Coastghost
          • Sy2502
          • Ray in VT

            And interesting enough economic mobility is lower in America, the land of the American Dream, than in Europe, where the social safety net is stronger yet mobility is higher.

          • Sy2502

            If Socialism is your thing, you should definitely consider moving over there. I emigrated from Europe to come to the US because of lack of mobility and all the problems related to Socialist government. But again, if that’s your thing, you know where to find it…

          • Ray in VT

            Much of my family has been here since at least 1650, so I think that I’m good here. If you are advocating a love it or leave it sort of position, then I would like to take this opportunity to make sure that you know that my family shed a good amount of blood defending this country long before you arrived on these shores, and if you think that someone with my positions would be better off going somewhere else, then perhaps you aren’t fully yet aware of what this country is all about. Also, please note that the same Chetty research that you cited notes that what I said is true in many European countries, so are you now attempting to discredit the conclusions of the researchers that you have just cited?

          • Sy2502

            Not a “love it or leave it”, but rather the fact that certain lessons are better learned first hand. Coming from Europe myself, I can assure you I have infinitely more opportunities of social mobility here in the US. Having had the opportunity to live both realities, I for one would not want to see the US go down the same drain as Europe. As a naturalized US citizen I have every intention to do what’s in my power to prevent it from happening.

          • Ray in VT

            So you seek to promote and discredit the same work? How do you know which part is worthy of support? Considering that I think that we’re on more of a path to being some sort of Central American banana republic, moving in a more European direction is far preferable, and I intend to do what is in my power to prevent the former in favor of the latter.

          • Sy2502

            I have no idea what you mean about me discrediting the study. I told you my 1st hand experience. I invited you to gain your own first hand experience and make up your mind on the issue. I don’t know what else you want.

          • Ray in VT

            So should we now allow such first hand experience to be used to counter the very research that you have cited? The problem with using such an approach is that when it does not line up with the much larger set of facts. Again, I like it very well where I am. My family has been in the state for more than 200 years. I just want to see an improvement, and not the sort of slide towards a few owning most of the nation’s wealth, which is the direction in which we are headed.

          • Sy2502

            I have already asked you to clarify what you mean when you say I am contradicting research. Do you think you could do that?

          • TheGettus

            Because you tout how the study shows US opportunity as stable over a time frame, yet when the same shows higher opportunity in the EU, you choose your personal experience over the study.

          • Sy2502

            Thank you for completely missing the point. I encouraged the poster above to make up his own opinion on the subject. The numbers I reported are real numbers that can be verified. Europe is a large and diverse place, each country has very different history, government, economies, etc. Talking of Europe as one country is idiotic. Ask people in Portugal, Spain, Italy, Greece, and recently France how they feel about economic mobility. Their situation doesn’t change because things are better in Sweden or Germany and therefore skew the statistics. Please don’t be the usual simplistic bumbling American that can’t even find other countries on the map.

          • TheGettus

            You asked Ray to explain what he meant by “contradicting research”. I told you what he meant, because it was obvious, and Ray seemed to have moved on. Now how did I miss the point?
            Of course, one must talk of Europe in the aggregate. The details of the study you brought up show vast differences in different states of the US, even though they are under the same federal government.
            Still, if aggregate is better than the US, please explain how that aggregate could be “skewed”. A basic understanding of statistics tells us that if several EU states are well behind us, there must be others well ahead of us to bring the average up.

          • Sy2502

            Since I knew I never contradicted the study, and therefore since I knew somebody had misunderstood something I had written, I wanted to know what in my post gave that impression. Ray moved on because he isn’t stupid and he got it. You on the other hand, are still stuck on it.

          • TheGettus

            You do realize that the study you brought to the discussion shows greater opportunity in the EU, correct? And did you or did you not try to refute that with your own personal experience, before you again tried to refute it with some unsound argument about different countries?
            Ray more likely moved on because he realized he was talking to someone who is profoundly convinced that he is a genius and anyone who disagrees must be ignorant…someone who goes on the attack rather than addressing the flaws in their own arguments.
            Maybe he is smarter than I, as he was quicker to realize that you, like the typical right-winger trolling NPR, don’t have an open mind and won’t respond to logic.

          • Sy2502

            Of the 2 questions you asked, the answer are yes to the 1st and no to the 2nd. And no, if you don’t get it I am not going to explain it to you. It would be a waste of time.

          • Ray in VT

            “I emigrated from Europe to come to the US because of lack of mobility and all the problems related to Socialist government.” Social mobility in a number of European countries are significantly higher than it is in the United States. If one wants to argue that conditions in certain countries are not great in terms of social mobility, then that is fine. I would counter, then, that when one looks at social mobility varies widely in the United States, as it does in Europe.

          • Sy2502

            Yes and that’s precisely my point. Europe cannot be lumped into a whole because it isn’t. What happens in Sweden is infinitely different, socially, culturally, historically than what happens in Greece. A Greek isn’t going to be any better off because somebody he doesn’t even know in Sweden is doing well. And since Europe doesn’t have one government, whatever goes on in Sweden will continue to not influence what goes on in Greece. It would be like lumping “Asia” together. What does “Asia” mean? Russia? China? North Korea? Burma? India? They are all apples and oranges to each other. Lump together the right unrelated countries and you can come up with statistics that say pretty much anything you want.

          • Sy2502

            Also, see here for a critique of the idea that America has greater social mobility than Europe

            http://www.commentarymagazine.com/article/social-mobility-america-vs-europe/

            In my country of birth, in 2013 72,000 businesses closed. 53% of young people looking for their 1st job are unemployed. I am sure they’d be delighted to hear how they have greater mobility than American youth.

          • Ray in VT

            So again, how do you know what part of Chetty’s work is correct if you are touting one bit yet denying another.

            How do you know that I am referring to the country of your birth? Conditions vary widely across Europe. Germany and Greece are far different, for instance.

          • TheGettus

            That was a very limited study that only compared two points in time, the earliest in the 1970′s. The details showed abysmally low opportunity in some areas of the US, and generally greater opportunity in Europe. You should look for a study that covers a larger time span.

          • Sy2502

            Oddly enough the study is so bad that it’s reported by all the major and most respected news media. Obviously they are all stupid and you are the only one to know better.

          • TheGettus

            I clearly said I had seen more than one study showing different results…Markus Jantti’s work, the Brookings Intstitute study, and one by the Federal Reserve Bank of Chicago among them. The childish smarminess is not helpful.

          • Sy2502

            I am smarmy because I take the word of respected media outlets over those of an Internet nobody? Oh well, you’ll have to learn to live with it.

          • TheGettus

            No, just in case you really are dense enough not to know, you’re smarmy because it seems you can’t have an adult argument without resorting to childish antics.

            I never asked you to take the word of an “internet nobody”, did I? No, I pointed to other well-respected studies with different conclusions, which you did not address.

      • HonestDebate1

        Yes, under the law they do. Further, being born with a silver spoon (not that there’s anything wrong with that) means it is not incumbent upon the individual to develop skills necessary to thrive in the market place. Having everything can mean having nothing in terms of self-esteem gained through accomplishments. If you have yes men who are paid for and lined up around the block the need to develop people skills or learn how to convince and influence becomes moot. Or not, no one is chained to the station in life they are born into. That goes both ways. The 1% is a very fluid group.

        Rich people can be miserable. I guess my problem is with what is implied by “opportunity”. The unalienable rights enunciated in the DOI are life, liberty and the pursuit of happiness which do not equate to wealth and status.

    • Coastghost

      Or: we can say that, in our Declaration of Independence, the assertion of the self-evident proposition that “all men are created equal” is not couched necessarily to mean that it is consequently any Government’s task to secure equality for citizens: no, the description of men being of equal status is asserted as a prior condition, whereafter the task of Governments is to foster (or: not hinder) pursuit of the inalienable rights of Life, Liberty, and Pursuit of Happiness: but “equality” of status is given as an ontological description of men absent any other arrangements.
      Or: does the Declaration’s assertion of the self-evident proposition that “all men are created equal” mean necessarily that any Government can, should, or is in any position to confer EITHER “equality of opportunity” OR “equality of outcome”? I submit that Government can secure neither condition and has no business trying.
      We could spend our time profitably by unpacking all these self-evidences we’ve come to rely on so dearly.

    • Alchemical Reaction

      What equality of opportunity?

  • Geheran1958

    That the “free market” system is not perfect has never been disputed. But when compared to government controlled economies Capitalism shines. The worldwide economic statistics speak for themselves. Tens-of-millions have been lifted out of poverty. Millions more have been educated with the “excess” profits generated by the wealth creators – the current US president and his spouse being the beneficiaries of this “inequity”. Like most things in life, Capitalism is subject to up-and-down cycles. In the early part of the 20th Century, this caused many intellectuals to fall prey to the false promises and ridiculous assumptions of Communism/Socialism promulgated by Karl Marx – a man who never held a job in his life and survived by sponging off the inherited wealth of Friederich Engels. The utopian ideals of Communism live on in the form of advocates of liberal, progressive and socialist ideologies. These ideas are promoted through the efforts of mostly well-meaning people who fail to see the importance of healthy competition as the fundamental driver of creativity and wealth creation.

    • https://www.linkedin.com/in/williamcornwell William Cornwell

      Increasing opportunity for all leads to more, not less, healthy economic competition. When an elite controls economic and political power, they use it to solidify their power and to stifle competition.

      • Geheran1958

        OK then how do you explain the decades long US leadership in wealth creation and philanthropy? In the 1950s there was a widely held view that computers would put millions out of work – and they did. But those “savings” were reinvested in new businesses that were enabled by the computer revolution and the rest is history. Many companies are sitting on piles of cash waiting for government to get off their backs so that cash can be put to work – a la 3D printing.

        • George

          Nonsense.

          Corporate may have all the cash but not all the brains. They sit on all that money because they don’t know what to do with it. And their corporate structure makes them risk averse.

          Recall, Apple did fire Steve Jobs…and it’s chasing Samsung. IBM, Microsoft, and Xerox having been sitting on cash a long time before Google.

          But I will leave you to your fantasy of government regulation being the enemy of innovation (unlike war and pestilence and famine and change I suppose).

    • ThirdWayForward

      Capitalism is a system of private, absentee, ownership of enterprises in which those who do the work are paid fixed wages and those own the enterprises (investors) reap all profit once wages and expenses have been paid. The market system, on the other hand, is a system of free exchange/distribution.

      The two should not be casually conflated. Much of what we value in terms of economic freedom, efficiency, and responsiveness to human needs and wants is the product of the free market system, not capitalism per se.

      We could have an economy in which those who work in large enterprises pay a fixed rate of return on capital that they borrow and who reap the profits. That form of profit-sharing/profit-distribution production would not be absentee capitalism. There would still be competition in the marketplace between enterprises, but without absentee owners. Investors would get their returns, albeit without controlling the enterprises to whom they lend money. Much of the small business sector operates this way — we could have an economy that favored small enterprises over large corporations, Main Street over Wall Street. We could and should have more real competition than we do.

      We have many criticisms of Marx also (Hegelianism is a terrible quasi-religious ontology in and of itself, and Marx’s authoritarianism presaged the almost unparalleled evils of Lenin, Stalin, and Mao), but you know Mitt Romney and the Brothers Koch have not had to work a day in their lives, and they have contributed far, far less to the self-understanding of the human race than Marx.

      Most of the uber-rich, the 0.1% who own and control most of the productive assets of our economy are not self-made people — they inherited their way into the upper class.

      Because of their inherited money, and only because of that money, they wield disproportionate power over the rest of us. The Kochs do everything they can to rig the political and economic system to work in their favor — the Tea Party is the political monster that they brought into the world and continue to nurture with infusions of cash.

      • Lector

        Don’t confuse capitalism and the value of free markets with the influence of money on politics. For every Charles or David Koch, there’s a Tom Steyer or George Soros. The majority of the largest donors to political campaigns are liberals (think unions, the plaintiff’s bar, etc.). The money spent by 501(c)4 organizations is pretty evenly split between conservative and liberal organizations. Neither Republicans nor Democrats are justified in criticizing the other for spending money.

        As for whether or not Mitt Romney or the Kochs “had to” work, it’s immaterial. The point is that they have worked, and they have done well as a result of their work. Contrast that with a Ted Kennedy who didn’t “have to” work and, in fact, never did.

        It might feel good to take some (most? all?) of Charles Koch’s or Warren Buffet’s or Mitt Romney’s money, but it won’t do anything meaningful to improve the lives of everyone else.

        What a capitalist does is assume risk. Most people in America won’t do that. They don’t want to be responsible for generating revenue, paying the rent, and, yes, creating jobs for wage earners. They want to show up, do a job, and collect a paycheck, but without the capitalist who puts his money, reputation, and well-being at risk, they have nothing. The great thing about America is that, if they don’t like it, they can do something else.

        • ThirdWayForward

          This is just not true.

          See, for example,
          http://billmoyers.com/2014/04/10/nothing-really-compares-to-the-koch-brothers-political-empire/

          The Kochs and the Adelsons and allied conservative dark money pits outspend Soros and the unions by far.
          Kochs: $400 million in 2012.

          There is nothing remotely like the Tea Party in enforcing ideological conformity (“political correctness”) in the center or on the left. Our government is completely paralyzed because of the Tea Party stranglehold on the U.S. House, and the Kochs are directly responsible.

          As for not working, the original post tried to dismiss Marx’s ideas by an ad hominem attack (not working a day in his life — a claim easily falsified by the man’s many publications — whether you agree or disagree with Marx, it is hard to deny his voluminous works).

          Romney’s “work” consisted of outsourcing American jobs and extracting consulting fees before gutting target companies. It would have been better for our economy had Romney never “worked”.

          Ditto for the Kochs — they spend their time trying to undermine any alternatives we might have to their coal mines. We would be all better off if they just retired and took their corporate jets somewhere else and stopped messing with the political system, They should not have the kind of control over the lives of everyday Americans that they presently wield with their $100 billion fortune.

          I would support a ban on all political contributions by corporations, unions, and organizations and a limit of $1000 on political donations by individuals. We need to get money out of our politics — both parties have been bought, lock, stock, and barrel.

          If we could insulate the political system from the influence of large accumulations of wealth, then the latter would not be so problematic for the future of our democracy.

          I’m not at all optimistic on that score.

          • Lector

            Actually, it IS true. Of the top 20 organizations donating to campaigns from 1989 to 2012, one gave mostly to Republicans, five gave evenly to Democrats and Republicans, and thirteen gave predominantly to Democrats. Of the top 140 organizations, 39% of the dollars went predominantly to Democrats, 25% mostly to Republicans, and 36% was split between the two.

            Of the 20 largest PAC donors to each party’s candidates in the 2011-12 election cycle, the top 20 Democrat PACs gave $39 million, and the top 20 Republican PACS gave $33 million.

            The Super PACS supporting liberal and conservative causes have given over $200 million to each side.

          • Ray in VT

            The “dark money” appears slanted pretty heavily towards conservatives. It’s hard to tell just where all of it is coming from and going, but Open Secrets tries:

            http://www.opensecrets.org/outsidespending/nonprof_summ.php?cycle=All&type=viewpt

      • OnPointComments

        What a load of malarkey. Most businesses are privately-owned by individuals who play a pivotal role in the companies; they are not absentee owners. These owners shoulder all of the financial risk of failure and success of a company, and often have risk of personal financial loss even if the business is incorporated. Nonowner employees who work for a business freely contract with the business to provide X amount of work for $X dollars.

        As Lector said before I could post this comment, Mitt Romney or the Kochs may not have had to work, but they did.

        • ThirdWayForward

          In terms of numbers, most businesses are small businesses, but in terms of wealth and power, most of the productive wealth of our nation is controlled by large corporate entities that are owned by the uber-rich.

          I think we should heavily favor small businesses (Main St.) that have some degree of responsibility for what they do over big ones that are beholden only to absentee investors.

          None of the big financial entities responsible for the 2008 crash and the ensuing huge destruction of middle class wealth seem to have suffered at all. And they are back to their games, at our expense. Too big to fail means that we collectively pick up the tab when these entities gamble unwisely.

          It would be better for the rest of us if the Romneys and the Kochs of the world joined the ranks of the idle rich instead of trying to rig the economy so that they can amass yet more wealth and power.

          • Lector

            I own Apple, Google, Starbucks, Panera, and shares of many other companies. I am not uber-rich. Most of the large corporations you’re referring to are not owned or controlled by a single individual or family. They are owned by tens or hundreds of thousands of people either directly or through mutual fund investments.

            How did the “big financial entities” destroy middle-class wealth? To the extent that the middle class owned stock and saw the value of their holdings fall, they have more than recovered that amount.

            To the extent that the middle class bought houses that they could afford, the decline in housing prices doesn’t affect them. To the extent they bought houses they could NOT afford and subsequently defaulted on mortgages, that’s their own fault (there’s no law against making a bad investment or paying too much for something). If they bought the house with no money down and insufficient income (because the government required that the majority of the loans that Fannie Mae and Freddie Mac bought be subprime), then they didn’t lose anything,

      • William

        Warren Buffet and Bill Gates don’t shy away from rigging the game in their favor. How did you fail to mention them?

        • ThirdWayForward

          Fine, include them.
          Add any other plutocrats you care to mention.

          Get them all out of our politics.

          But we do need to recognize that some of these political meddlers are presently acting in ways that are fundamentally bad for our nation, that in effect have made the country ungovernable.

          They fund political groups that are paralyzing the political system and
          continually threaten to shut down the government. BAD, BAD, BAD.

          • Ray in VT

            Unless the bad, bad, bad government is getting on your back for polluting or wants to hamper your ability to sell a product just because it gives people cancer, then paralysis may be in your interest.

          • OnPointComments

            The most flagrant recent example of a quid pro quo political contribution buying a desired result is Tom Steyer’s purchase of a delay of the decision on the Keystone pipeline.

          • ThirdWayForward

            I think all political contributions over $1000 should be banned, whatever their purpose.

            The Keystone extension’s purpose is to allow Texas refineries to export Canadian oil overseas without having to pay US refinery taxes on it. The oil is not for our use. The jobs created are temporary. It will cost US taxpayers $1-1.8 billion in oil industry tax breaks.

            http://priceofoil.org/2012/02/08/keystone-xl-benefits-from-taxpayer-subsidies/

            Apart from all that, I don’t understand why a new pipeline needs to be built — obviously there are fortunes to be made on real estate in Montana, Dakota, and Nebraska, else why not expand the existing pipeline right-of-way?

          • crescentfang

            No, good, good, good! There is a difference between throwing sand in the wheels of progress and using it to help the brakes when the train is going off the tracks. The only “bipartisan” laws coming out of Congress recently are the ones that sell us out to special interests or repeal our civil rights.

      • harverdphd

        Ooph! You had me worried for a second…thank God Marx et al only cost us 100 million lives in their time for self understanding of the human race. And if Romney and the Koch brothers kill 100 million people I’m going to be really pissed!

        • ThirdWayForward

          And if they do kill 100 million people, we will blame it all on Ayn Rand.

          This is really silly.

          Marx did not kill 100 million people — Stalin and Mao did. It’s like saying that Jesus is responsible for all the religious wars that have plagued Europe and all the murder and torture associated with the Inquisition (Jesus isn’t responsible, but some of his followers are).

          Marx is not completely blameless for some aspects of his political ideology, but this does not make him (or his economic theories) responsible for how megalomaniacal despots made use of it as a state religion to justify and further their own evil purposes.

          Russia and China probably would have been mired in bloody civil wars and purges had Marx never been born.

          Obviously nobody is accusing Romney and the Kochs of killing anyone — they are respectively just undermining our economy (by outsourcing jobs, raiding viable enterprises) and our political system (by providing Tea Party organizations funds to enforce ultraconservative ideological conformity within the Republican party that in turn paralyzes our political system).

          • FactCheckerGuy .

            It is just a wildly unlikely, near astronomically unlikely coincidence that all of the world’s most murderous regimes have been socialistic or communistic and have existed in the last 100 years?

            Like being hit by lightning? Every day for a month?

    • John Cedar

      You make a huge mistake to characterize the enemies of capitalism as “well meaning people”. They are largely driven by revenge, schadenfreude, jealousy, sadism and hypocrisy.

    • SteveTheTeacher

      “The worldwide economic statistics speak for themselves. Tens-of-millions have been lifted out of poverty. ”

      And tens of billions who have either died or continue to live as expendable human beings through exploitation of their labor and the natural resources of their homelands.

      What is your opinion of the work of some Mathematicians and Physicists who have indicated that:
      1. Wealth accumulation in the hands of a few is an inherent feature of a market/capitalist economy. Check out Chatterjee’s “Econophysics of Income and Wealth Distribution.”
      2. The principle of continual economic production and growth leads to resource depletion.

      Even if we assume that the capitalist system “shines,” does this imply that there is no room for improvement and/or no other viable economic systems?

    • Alchemical Reaction

      Why are you repeating outdated conflicts. There are so many NEW options!

    • TheGettus

      Capitalism has done great things for humanity. So has fire, but no one is calling for a ban on extinguishers and fire departments.
      I am astounded at all the well-meaning conservatives who think they need to remind us that communism was a failure. Giving government control of business won’t work, but will it be any better when business has control of government?

      • crescentfang

        Business in control of the government is exactly what we have today. Just look at the ACA! Colluding to raise the prices of insurance for young people would be a violation of antitrust laws if the government wasn’t part of the conspiracy. Do you think Obama and Romney raised that $1b in campaign funds without selling the rest of us out to moneyed interests?

  • Alchemical Reaction

    Two Words. “Binary Economics”.

  • Cyn

    Why taxes? I see the problem, but there needs to be a better solution. My husband and I are middle class – upper but far from rich. We pay hefty taxes – about 50% if you include sales, excise, pet, property and income. My issue is with the stewards of the bulk of our tax dollars; the federal government. Welfare, the public schools and now our healthcare. The botch it all and they say it’s not enough, we need more. No.

  • Andrew_MN

    This once again smacks of an attack on capitalism without dealing with the fact that we’re not operating under a truly capitalistic economy. Much of the wealthy class would dislike real capitalism as much as a socialist would, and it is managed economies that lead to most of the inequalities we’re seeing today.

    • Alchemical Reaction

      Ummm. Corporations collude to bury emerging technologies because they threaten to destabilize current revenue streams ALL THE TIME.

      In a completely “free” market how would the right to compete be protected? What is to stop a big company from becoming a monopoly?

      I agree politics contributes to the problem because of corruption. But that is not regulation’s fault. It’s corruption’s fault.

      • Andrew_MN

        Monopolies aren’t what you really have to worry about – every author or musician with a copywrite, for example, has a monopoly over the publication of their work – rather you should worry about monopolistic pricing.

        If you’re assuming that monopolies are bad because they will always raise prices to levels that are too high then the competitors or substitutes with lower prices will start to enter the market. If you then assume something like “oh the big company won’t let them” then that has to take the form of buying the competition (which will cost the monopolistic company a lot of money) or lowering their prices (which was your assumed goal). I suppose you could add “buying gov’t favors” to the list, but that wouldn’t be an option in a society with true separate of economy and State.

        • Alchemical Reaction

          Interesting thoughts to consider… Thank you.

          In a truly free market economy how would sustainability and environmental issues be addressed?

          Also, how would the necessary big investments in infrastructure be made that businesses rely on?

          • Alchemical Reaction

            And what about white collar organized crime? Doesn’t regulation help prevent this as well? Some organized crime is extremely sophisticated, and even cross-breeds with political corruption.

        • Alchemical Reaction

          I have considered all of this and come to the following conclusion. A truly free market economy would be absolutely fine as long as environmental sustainability is addressed and as long as binary collateral free business loans are provided by a central bank to ensure anyone who wants to start their own firm, CAN.

      • Andrew_MN

        I need a better framework for the first question about the “right to compete” before I can respond to it. In a truly free economy I don’t see this being an issue.

        • Guest

          Oh, well if you don’t see it being an issue it must not be… lol

          • Andrew_MN

            I must not understand the question or concept you’re trying to bring up. What do you mean by “right to compete”? If, for example, I own a factory would I have to give you a production line if you wanted to make the same goods? Otherwise I might be infringing on your ” right to compete ” with me.

          • Alchemical Reaction

            The right to compete is an implied principle in capitalism. Capitalism doesn’t work without competition.

            This is why binary collateral free businesses loans need to be provided by a central bank using only intellectual capital and computer models as the basis for loan approval. Thus, anyone who wants to start their own firm, can do so regardless of credit and regardless of collateral or family capital.

            This trend has already started in the form of crowdfunding.

    • kentchris

      So Andrew, you don’t want just a “capitalist economy”, you want a “truly capitalist economy”. Exactly what is the difference between the two

      • Andrew_MN

        My ideal would be a completely laissez-faire system, but I’ll settle for as little State involvement in the economy as possible. (policy, fire, (smaller) military – I’d hate to have all the “WELL YOU MUST WANT CRIME EVERYWHERE” type comments coming after me) :)

        The primary role of government would be to protect property rights. Everything else can be handled by the Market.

        • kentchris

          As long as your Ideal doesn’t trump reality your “laissez-faire” dream sounds really cool.
          Especially if you happen to have some property that needs protecting.

          • Jill122

            AND if you already had tons of money and didn’t have to hope you would make any. Individual guy against the corporations! LOL! Ayn Rand’s wet dream, as long as she was being supported by her loving “students” with “lecture money.”

          • Andrew_MN

            The part you’re missing here is that even if you had just a whole bunch of money in a vibrant, free economy you have to actually know what to do with it or you’ll probably end up penniless. Even if that means you just hire someone to manage it for you, wealth still has to be managed.

          • HonestDebate1

            You should incorporate.

        • RolloMartins

          I guess you never heard of the BP oil spill, the Koch brothers’ polluting factories, tar sands, fracking pollution, unfettered chemical industry, mass extinction within the ocean due to overfishing, climate change, food adulteration, hiring biases, safety regulation mishaps (GM?)…the problem is not too much regulation or too much gov’t but too little.

    • RolloMartins

      Don’t think so. Some of the most managed democracies in the world are also some of the least unequal (Finland, Sweden, Denmark) and also some of the most mobile.

      • Andrew_MN

        You make a valid point and it’s true that the Scandinavian model does address some of these issues around inequality, but you have to be careful in presupposing that it is government intervention that fixes their problems. There’s a lot more complexity to the culture and theories on sustainability at work there than just heaping on government regulation.

  • Alchemical Reaction

    N. Gregory saying economics is not political. What a fraud. If economics isn’t political, then go back to simple economics instead of basing economic policy on Keynesian theories! I will never believe another thing N. Gregory says!

  • Bart caruso

    I hate this kind of discussion – where they start with a false premise. We don’t have true Capitalism anymore. Wall St. Investment Banks don’t get Bailed-out under Capitalism. A Central Bank doesn’t create new money to buy the Toxin Assets still on the banks’ books – because they crashed the global economy before they could foist them all off on an unsuspecting public.QE is fraud ,theft of buying power of the of the workingman’s wage. Crony Capitalism, yes . Some call it Plutonomy.

    • Jill122

      Well you’re right of course, but two points. He didn’t talk about any of that. His book is focused on the results of our system (whatever you want to call it) over time. Secondly, we would be up the proverbial creek without any paddles if we had not bailed out the banks, AIG and the auto companies.

      Hoover didn’t bail us out either. He too, like you, believed in “true capitalism” whatever that might mean to either of you.

      Our grandparents can thank their lucky stars that FDR was not so stuck on ideology, more concerned with people being able to eat.

      • twenty_niner

        Tell that to the shareholders of GM because they all got wiped out, and somehow one of the most complicated, integrated companies in the world managed to make through its bankruptcy with its production capacity, jobs, and sales channels intact. And GM actually makes stuff. And they have new shareholders and a new board of directors that hopefully learned a few things along the way.

        Meanwhile, you have Wall Street shareholders, largely made whole courtesy of the tax payer, with no lessons learned other than the muppets can be counted on to come to the rescue; and like it.

        Golden Sack got paid 100 cents on the dollar for their CDS positions with AIG, which in turn was paying its gambling debts off with tax-payer money. GS would’ve gladly taken 50 cents, 25 cents on the dollar, because there were no better offers, but I guess that’s what all of those campaign contributions are for.

        Attached is chart showing Deutsche Bank’s 75 trillion-dollar derivatives portfolio, over five times the size of the European economy. Think any lessons were learned?

    • RolloMartins

      True we don’t have Capitalism (we have a kind of corporatocracy), but false on your point about QE fraud creating new money. There is nothing wrong with creating new money. That is how our economy works. The Treasury (along with the Fed) creates money, which is then spent. We collect taxes not to spend that money but rather to give value to money (and to alter the amount of currency as hedge against deflation/inflation). QE didn’t create a theft of buying power. Inflation is still nonexistant. We should have spent a great deal more and still should.

      • Andrew_MN

        Inflation is an increase in money supply -basically QE by another name. Rising prices are a general side effect of inflation and prices are certainly rising in everything from food to our homes.

        How is it that connecting taxes is what give money value?

        Also, taxes in no way function as a hedge against inflation. Inflation is a function of the supply of money which is driven by federal reserve policies.

      • r2bzjudge

        QE is theft of buying power.. It reduces the value of every dollar in existence. Savers are getting ZERO interest while the value of the money they earned and saved, declines.

        Inflation is not non existent. The government purposely mis- states inflation.

        Taxes are not collected to give value to money. The value of money is in relation to what it will buy.
        Deflation makes money more valuable, as more can be bought with it. Inflation drives down the value of money.

      • Bart caruso

        first of all, as I’m sure you know , your corner bank creates new money everytime the make personal loan. That’s how new money enters the sytem(it’s called fractional reserve lending and its part of the Federal Reserve System) I don’t know what the treasury does anymore , but they don’t create money at all. QE started at $85 Billion every month and that went on for … a year? Two? They just announced another reduction today, down to a mere $45Billion every moth. And it goes to Wall St. to BUY they’re Fraudulent dirivative. Maybe that money hasn’t trickled down yet – that’s what QE is ,Trickle Down Economics- but if you haven’t noticed a rising cost of living – btw “Inflation” is by definition creating new money ,i.e inflating the currency base – the cost of living ,or CPT is the Effect of Inflation (and btw,again, they’ve been gerryrigging how they calculate the CPI for years , it no longer includes housing, fuel, or healthcare ! pretty insane huh ? – I don’t know , either you get regularly adjusted wages, or are pretty young and therefore have nothing to compare todays prices to. Yesterday , I read the Census Bureat stats that Median wage for fulltime work peaked in 1973 , adjusted for Inflation .That wage ,btw, is around $51,000, in today’s dollars which back then was less than $10,000. Wages never keep up with the cost of living (Rents , Homes, Cars, Fuel , Healthcare) because Inflation FAR out-strips them.

  • kentchris

    Although it’s the right of every individual or group of individuals to try and solely dominate the worlds economy along with the worlds politics, it’s not the duty or responsibility of the rest of the worlds population to support their attempted domination or even to cheer them on. In fact we can say “NO”, and we can limit an individuals or any groups attempt to dominate the whole or any part of the whole.
    It’s been done before and will be needed to be done again.

    • brettearle

      Based on what you’ve written above, it Kinda puts one in the mood of supporting government regulation….now doesn’t it?

      • kentchris

        I would think so.

    • StilllHere

      So we let those few in the government run the economy? Good thing they’ll have everyone else’s interests at heart.

  • Madeleine

    Tom, as Greg is saying that we should focus on things like improving education instead of wealth concentration and taxation, can you ask Greg about where and how he expects to fund improvements to education?

    • StilllHere

      Pension reductions.

    • Human2013

      We’ll need to borrow it from China.

  • Human2013

    Oh, the “skils gap.” I love how the wealthy and academia (Mr. Mankiw) love to boast that Americans just don’t have the skills. In this form of capitalism, what’s to stop the MD, the DDS, the “coder,” the nanotechnologist from becoming the McDonald’s workers of the future. The issue isn’t skills, the issue is the Corporations’ relentless pursuit to undermine and dissolve wages.

    And there wealth was mostly, if not entirely, built on the back of low wage workers and their departure to provide them with retirement funds and healthcare.

    There is an obvious correlation in the rise of CEO pay and the demise of the pension. CEOs are not brilliant innovative leaders; they are cold-blooded puppets of their investors that scream: bring me more, more, more at any cost. At the cost of society, at the cost of our infrastructure, at the cost of safety and security, at the cost of our youngest, precious citizens.

    • StilllHere

      Really On Point, thanks.

    • Harlan Green

      Read my “The Bully Mentality” re how those act who are at top of income ladder–http://populareconomicsweekly.blogspot.com/2014/04/the-bully-mentality.html

    • r2bzjudge

      “There is an obvious correlation in the rise of CEO pay and the demise of
      the pension. CEOs are not brilliant innovative leaders; they are
      cold-blooded puppets of their investors that scream…”

      Have you ever watched the TV show Undercover Boss, or The Profit? You paint with a rather broad brush.

      Do you have a 401K or an IRA? You are an investor. What happens to a retirement fund when corporate profits decline or turn into losses? The fund shrinks in value.

      As far as the demise of the pension, nothing lasts forever. A long term cycle goes from trough to trough. From the Great Depression, we have come full cycle to another depression. If you look at any two consecutive decades, the latter never looks like the former. The 1930′s were not like the 1920′s. The 1940′s were not like the 1930′s. The 1950′s were not like the 1940′s.

      A depression is a reset of a long term cycle. What existed during a boom, unravels during a bust. Watch what is unfolding in Europe.

    • Adam Bray

      This makes CEO’s out to be cold blooded and deceitful, but for the majority of CEO’s they are not like this. Most CEO’s are good people, but the drive from Wall Street for better and better results no matter what the cost is the problem. Most CEO’s and Upper Mgmt have to make many of these cuts, not because they can’t pay them to stay competitive, but to please the investors who can tank the stock. Its the relentless drive towards better and better profits, no matter what it does to the company long term or does to the social fabric of the country is what creates these issues. Greed can be a force for good, if harnessed properly, but it has now overtaken everything as the driver of success and it will only get worse unless we change the rules and rein in the greed of Wall Street. If you can change Wall Street, then you can change the country.

    • Human2013

      Are we in the twilight Zone. Our minimum wage is $7.25/hr. That is a NON life-sustaining wage. That wage is NOT enough for food, housing and shelter anywhere in the Country. Remove government subsidies and these workers would literally be rioting in the streets.

      “No one who, like me, conjures up the most evil of those
      half-tamed demons that inhabit the human breast, and seeks to wrestle with them,
      can expect to come through the struggle unscathed.”
      Sigmund Frued

      Go right ahead and release the beast.

      There was NO recession, but there was a massive transfer of wealth that occurred and continues to occur everyday.

  • witsendnj

    What I wrote to my facebook friends – Since I’m on the way back to NJ from Florida, and I got tired of Country Western music (which I like but they keep playing the same 10 songs over and over), I turned with reluctance to NPR. I discovered it has become even more delusional than when I stopped following their news. It happened that the program was On Point with Tom Ashbrook, who in his usual breathless style exhibited a truly embarressing mancrush for Thomas Piketty, who has stumbled upon what is no doubt rather unexpected 15 minutes of fame for writing the best-selling book, On Capitalism and Inequality. Let’s leave aside the truly craven criticisms by Gregory Mankiw of Harvard, former consultant for Mitt Romney, who finally resorted to attacking Piketty for royalties he imagined would be put into a savings account, so pathetic were his excuses for not taxing the wealthy (it’s worth listening, just to hear Piketty sort of serenely eviscerate him…don’t you care about the poorest? What would Jesus do?).

    ANYWAY what had me rolling my eyes and nearly screaming at the speakers was the notion that capitalism won’t work without some fundamental changes in the inequality of wealth, which was held in check in the 20th century by wars and the depression. This entire discussion between Ashbrook, Piketty, Mankiw, and every call-in guest ensued without ONE mention of the fact that civilization has always been hideously unequal because it was always based on human slavery of one form or another…and the middle class that wasn’t enslaved ONLY arose, because we didn’t need the slaves anymore – we had OIL. Cheap, abundant energy which is now waning, and so of course, wealth is once again concentrating at the top, which is another way of saying, everyone else is returning to surfdom.

    It seems to me this book is “on fire” as Ashbrook gasps delightedly because it clings to the idea that there is a way to avert a total collapse of industrial civilization…oh, and the rich-peoples-heads-on-pitchforks that they perceive will be their fate, sooner or later…

    • OnPointComments

      I’m not sure that I agree with everything in your comment, but I had to give it a vote up for the phrase “Tom Ashbrook, who in his usual breathless style exhibited a truly embarressing mancrush for Thomas Piketty…”

      • witsendnj

        why thank you. But the peak oil/resources is the main point. Neither of them get it, which would be comical, if it weren’t so endemic, and tragic.

        • StilllHere

          Elaborate on peak oil given potential shale and tar sand deposits. I’ve seen studies noting that miles driven and gas demand appear to have peaked in developed economies. What do you believe will happen to demand in this peak supply world we are headed toward?

          • witsendnj

            Tar sands and fracking, deep water drilling, mountaintop removal and Arctic exploration are EVIDENCE of peak oil. We would not be engaged in extracting fuel using such extremely destructive, dangerous methods which also have very low EROEI values if we weren’t desperate. We do live in a finite, world, or hadn’t you noticed? And in case you missed it, demand in the developed economies may be leveling off but that is dwarfed by the populations in developing nations who all want modern conveniences like refrigerators and cars, too.

          • pete18

            You’d be interested in reading this article:
            “The World’s Resources Aren’t Running Out!”

            http://online.wsj.com/news/articles/SB10001424052702304279904579517862612287156?mg=reno64-wsj

          • witsendnj

            Not really. The headline is risible. We do live on a finite planet, right? So resources are finite, right? It’s not just oil either – many minerals essential to industrial civ. are running out, fish stocks are horrendously depleted, forests are being taken down far faster than replacement rate. The idea that resources are infinite is a religion not worth debating so I will simply refer you to: http://www.amazon.com/Scarcity-Humanitys-Christopher-O-Clugston/dp/1621412504

          • pete18

            Your response is risible. If you don’t read the article you’ll never find out what the merits behind the headline are. Your loss if you don’t want to measure your views against a well reasoned counter argument. I’d think someone who is open minded and confident about their own ideas would be at least curious about something that so boldly cuts against
            conventional wisdom.

          • witsendnj

            You’re assuming I’m not already familiar with the argument/propaganda. The idea that resources are infinite and we can continue to grow *IS* conventional wisdom. And it’s wrong.

          • pete18

            I have no idea what you are already familiar with or how that relates to the article I posted. Maybe it’s old news, maybe it’s not. You’ll never know unless you read it.

          • The poster formerly known as t

            Your pov is not supported by facts. Your pov is propaganda, plain and simple.

          • pete18

            I can do that too, your pov isn’t supported by the facts, your pov is propaganda. Not much to that is there? Are there some specifics you’d like to put on the table? Or are you, like, witsendnj, just satisfied with proclaiming yourself to be right and moving on?

          • The poster formerly known as t

            The math and science doesn’t support infinite resources and infinite economic growth. The math and science says that industrial civilization is fundamentally unsustainable.

          • pete18

            That’s as general and non-specific as your first statement. You didn’t read the article either, did you?

          • The poster formerly known as t

            I did. It’s total rubbish.

          • r2bzjudge

            There is a finite land mass, but human ingenuity is always finding solutions to problems. It won’t work for fueling cars, but The Navy is looking at making fuel from elements in sea water, to power ships.

            I read a story today about China 3D printing a small house for $5,000. No wood involved.

            With bio-engineering, all manner of things may be possible at some point in the future. There could be a limitless supply of food, simply manufactured from organic ingredients produced on an industrial scale.

            Knowledge and technology is advancing rapidly.

          • witsendnj

            No amount of cleverness and technology can replace natural resources like fresh water aquifers that are being depleted, or clean air that is being inexorably turned into gaseous poison. See: http://scienceblogs.com/gregladen/2013/01/29/whispers-from-the-ghosting-trees/

          • StilllHere

            Why dangerous? Fracking began 40 years ago. The universe is expanding. Let’s convert coal to liquid. Really, so what has happened to oil consumption globally over the last 5 years? Supply and demand seem to be in balance at least judging by oil prices. My refrigerator doesn’t take oil, does yours? Not sure what that has to do with peak oil.

  • OnPointComments

    If you were going to seek the wise counsel of an economist to help a nation, would you really choose a French economist? Surely we can model ourselves after something better than the zero growth economy of France.

    • Mahatma_Coat

      From your comment, I would guess that you have not read the book, listened to the show or studied in economics.

    • witsendnj

      How can anything grow perpetually on a finite planet? That is the cancer model, you know!

      • The poster formerly known as t

        Don’t go there.
        You type of thinking is rational, which would alienate most of the general public, who want to be told that they are going to live forever, will be getting a flying car soon, and will be able maintain their resource-intensive lifestyles by going green.

    • RolloMartins

      Well then perhaps we should model our economy on the social democratic states of Scandinavia? They are among the most mobile and entrepreneurial in the world (much more so than the USA).

      • The poster formerly known as t

        Sure. What works for a smaller population of homogeneous people will work for a large, fragmented society that is politically polarized and ignorant.

  • Harlan Green

    All the hullabaloo re Thomas Piketty’s master economic work, Capitalism in the 21st Century
    has overlooked its real importance. Economics is finally becoming a
    science, rather than just social science based more on theories and
    formulas (such as mathematical models), than empirical research until
    now. And so it now describes the real world, and the real job of government to level the playing field.

    But he neglects to mention another solution described in Nobelist R. Shiller’s “The New Financial Order, Risk in the 21st Century”, setting up futures markets that could eventually insure against all forms of risk. He and Karl Case are doing that already with their Macro Markets research and indexes, such as S&P Case-Shiller Home Price Index. This book should be companion piece to Piketty’s!

    • r2bzjudge

      ” Economics is finally becoming a
      science, rather than just social science based more on theories and
      formulas (such as mathematical models), than empirical research until
      now.”

      As they say, garbage in, garbage, out.

      I make a widget. I want to sell it for 5 dollars. You want to buy it for 2. We agree on 3. A free market.

      Market manipulation does not work. Wage and price controls do not work, which are manipulations of the market.

      There is nothing scientific about an economy. There is a lot of false science about how economies should be manipulated to some end. Piketty has written his version of how an economy should be manipulated to an end, through his 80% tax.

      It will end in failure.

      If there was some economic theory that actually worked, we would have been using it for millennia already. There truly is nothing new under the sun. It has been joked of bankers, why do they always seek new ways to lose money, when the old ones worked so well? The end result is always the same.

      Greenspan was called The Maestro. That worked until financial truth caught up with him. Simple math: 100% of booms end in a bust. 100% of bubbles burst and deflate. Thus Piketty is assigned the same fate as Greenspan, regardless how good anyone thinks he appears on paper. Math ALWAYS wins. Nor can Piketty defeat human nature. That has been proven time and time again.

      • Harlan Green

        The 92% tax on highest income bracket worked for Eisenhower–it built our roads and bridges, which currently need approx. $2.2T just to be fixed….The economy already being manipulated–by the 1% of corporations and Wall Streeters. Why do you think they make such obscene profits??

        • r2bzjudge

          A 92% tax worked? The U.S. was producer to the world when Eisenhower was President. That American producer era doesn’t exist any more. Japan and Europe recovered and China is now producer to the world.

          Every empire falls and that includes the U.S. At the top of a mountain, the only direction is down to the next valley. You simply can not live for eternity in 1955.

          The economy is being manipulated by the government and the Central Bank.

          The FED artificially raises and lowers short term interest rates, which is a manipulation.. The government intervenes in the economy, which is a manipulation.

          The FED is suppressing rates for the benefit of the government to borrow huge sums of money at low interest. This policy is distorting the economy and fueling the income inequality President Obama complains about. Ironic, isn’t it.

          Obscene profits. Large corporations are economies of scale.

          If an actor plays only for an audience 1,000 people, he may make $1,000.
          If that actor stars in a movie, with an audience of 10,000,000, that actor may make $10,000,000. Economy of scale.

      • Alchemical Reaction

        Then base economic policy on simple economics rather than Keynesian theories!!! You people are so ignorant. Go to school!

        • r2bzjudge

          “Then base economic policy on simple economics rather than Keynesian theories!!! You people are so ignorant. Go to school!”

          You people?

          It is the government that is trying to complicate the economy and command it to do something. Despite their best efforts, the business cycle has not been eliminated.

          In trying to soften a recession with intervention, they also soften a recovery. Action and reaction, equal and opposite.
          Trying to avoid pain in the recession, causes pain in the recovery, due to the distortion of the process.

          It is not i who needs to go to school.

          • Alchemical Reaction

            Hey, my apologies. my comment was not intended as a response to your post, but a response to the discussion in general. I actually agree with your points, wholeheartedly.

      • The poster formerly known as t

        Math says that most of the externalities from 100 years or industrialization and “economic growth” ,ie. more humans consuming more resources will end in tears. Capitalism, like all organized versions of civilization are pyramid schemes and usually end in a bust. And that bust is usually a social collapse of some sort. Capitalism self-destructed by the 1930s. It took another World War to bring some life back into the free market, you know, kill a few competitors. There’s nothing free about forcing people to sign free trade agreements and installing military bases in their back yard in the name of “free trade”.

        • r2bzjudge

          Technological advances have always beaten the prophecies of doom. Go back in history and prophecies about overpopulation or resource limits were predicted to have doomed us already.

          A cycle always has a peak and a trough, which is why every boom ends in a bust.
          A major debt boom, like we have globally, now, will end in a social collapse of some sort. It is already happening in some parts of Europe and the Middle East. Martin Armstrong is expecting it to be global as the next economic downturn occurs. With global central bank intervention, global debt has increased from 70 to 100 trillion dollars. The debt problem is now worse.

          The U.S. economy crashed in 1921, after WW1. There was a major contraction of GDP. The government left the free market alone and the economy sharply rebounded from a sharp contraction, within 18 months.
          Faced with a similar situation at the end of the roaring 20′s, Hoover intervened.

          Intervention always distorts.

          Failure is a part of capitalism. There is no guarantee of success. Thomas Edison failed many times before he found a filament that would work well in an incandescent bulb.

          Capitalism succeeded rather well in the 1920′s as automobiles became popular and radio was the .com of its era. Financializing became popular, in the second decade of the Federal Reserve.

          WW2 grew out of WW1. It was more than killing a few competitors. Upward of 60 million people died.

          Will Ukraine be the start of another major European war? This “Great Depression” will result in much social unrest in the next economic downturn.

          • The poster formerly known as t

            We’re not having a fact-based discussion,here. You are expressing a religious narrative devoid of any empirical research.

          • r2bzjudge

            I noticed your religious narrative.

            “Math says that most of the externalities from 100 years or
            industrialization and “economic growth” ,ie. more humans consuming more
            resources will end in tears.”

            In the religious narrative of previous gloom and doom prophets, that was supposed to have happened already. The Rand Corporation determined some time ago that the earth could support a population, i think, of 4 billion people. We are at 7 billion.

            China just demonstrated 3D printing a small house, out of concrete, i believe, for $5,000. No trees needed. No steel.
            Carbon fiber and other materials have been developed, including a carbon based product i can’t think of the name of, which is supposed to be a big game changer when it starts coming available.

            Human knowledge is doubling at a fast rate. Bioengineering, nano technology. Robotics.

            Hydrogen fuel cells. i believe China is working on developing thorium reactors. The U.S. is having an oil boom, after Hubbert’s law said that U.S. production was supposed to permanently decline after 1970.

            As far as ending in tears, every boom ends in a bust. Every empire rises and falls. Cycles will never be eliminated.

            Tears are a part of life.

  • Lector

    We could start by spending less. In FY’15, the federal government will spend almost $11 billion a day. Tax revenues are at historic highs, yet we’re still spending a good $500 billion more than we generate in revenue.

    Regardless of marginal rates, tax revenue has never exceeded 20% of GDP. When the top rates were 90% in the 1940s, revenue was less than 20% of GDP. When the top rates were 28% in the 1980s, revenue didn’t exceed 20% of GDP. It’s delusional to think that the government can continue to spend 22-24% of GDP.

    The top 10% of taxpayers already pay 70% of all taxes. The bottom 50% pay 3%. There isn’t enough money among the top 10%, let alone the top 1% to solve the spending problem. Keep in mind that you only have to make $120,000 to be in the top 10%. If you’re making $120,000 and have children, you’re worried about paying for school and retirement. How much more in taxes should those people pay?

    • RolloMartins

      You misunderstand the problem. Taxes are not where we get revenue. That is, we are not revenue constrained. Of course gov’t can continue to spend at current rates (I would say we could increase spending greatly, by about $1trillion). Taxes do not fund the gov’t. The Treasury funds the gov’t. Taxes do not matter one bit (as far as funding goes). We could take the entire taxes received and press the Delete button and no one would notice. That is what a fiat economy means.

      • Lector

        Literally true, of course, but I’m one of those hopeless romantics who like to believe that there’s still some semblance of responsibility and decency left in government.

      • r2bzjudge

        If the Treasury funds the government, the debt ceiling can simply be capped. However, there was all this talk of default, if that happened.

        The fiat economy is created out of debt. The money is borrowed into existence.

        Global debt has increased from 70 trillion to 100 trillion since the 2008 recession.

  • RolloMartins

    Greg Mankiw sees no problem with wealth accumulation. Education! is the cry. Interesting, isn’t it, that the US education system lags behind the world…except for the wealthy. U.S. Healthcare lags behind…except for the wealthy. The American dream is nonexistent…except for the wealthy. Justice lags … except for the wealthy. Pretty sure wealth accumulation is a problem, Greg.

    • Greg & Huan of Old

      Well said Rollo.

    • r2bzjudge

      The education system is lagging for reasons other than wealth accumulation. Di Blassio is trying to shut down charter schools in New York City, for one. He doesn’t care that the kids in those schools are doing well. He wants everyone in government run schools.

      The government has intefered in the free market health care system. The government grants anti trust exemptions and also makes mandates, which drives up cost. Competition drives down cost.

      Supposedly half of French youth want to leave France. France has high taxes on the wealthy, yet they do not have whatever their French dream is.

      • The poster formerly known as t

        Competition drives down wages. We have increasing labor competition while business competition is somewhat static–because the number of businesses that can effectively compete in any market is finite, barring industrial policy. We have growing labor (the main output of civilization is really population growth), a static number of profitable businesses.

        • r2bzjudge

          A growing labor supply is the trend due to an economic depression, which the government has prevented from bottoming out due to its intervention in the process.

          Competition drives down prices. competition drives down wages.

          If prices drop more than wages, it is a net positive. The problem is not lower wages, the problem is debt and the FED driving inflation to try to keep debt from defaulting.
          However global debt has increased to 100 trillion dollars, from 70 trillion, creating a bigger debt problem.

          Criticism of the government is not laughable, as the government is in the business of manipulating the economy.

          In France, Hollande wants to make it prohibitively expensive for businesses to fire people. In response, businesses will avoid hiring people.

          The U.S. government created 80,000 pages of new rules and regulations. Try imagining how that is going to negatively affect businesses.

          Los Angeles taxes gross revenues, which Mayor Garcetti just admitted is suppressing job growth in L.A. California is also lagging in job creation. California government is said to not be business friendly.

          A business unfriendly state creates more competition for the unemployed, as businesses are less inclined to hire.

          • The poster formerly known as t

            Don’t try to feed me that liberal arts crap. The main byproduct of any successful civilization is human population growth and labor efficiency which means, aside from the exceptional workers, labor cost, labor wages, and sheer demand for full-time workers goes down over time . There’s a reason why all the great civilizations embraced slavery. Cheap labor is what allows the wealthy to live such splendid and enviable lives. Technology powered by fossil fuels haven’t changed the requirement that in order for the wealthy to be wealthy, (in order for capitalists to stay profitable)they need an army of servants working for close to nothing.

            Spare me the supply side b.s. Large collectivist corporations are doing just fine. They practically have regulators in their pocket. Capital is fleeing the decent living standards of the U.S., NOT regulations. In “business friendly” countries, workers are forced to work in unsafe buildings that collapse on them. (Bangladesh) and to pollute water supplies. Large corporations, as in large established businesses, don’t want more competition, and have so many workers begging to work for them that they only do hiring through internal referrals.

          • r2bzjudge

            “Spare me the supply side b.s. Large collectivist corporations are doing
            just fine. They practically have regulators in their pocket. Capital is
            fleeing the decent living standards of the U.S., NOT regulations”

            Supply side B.S.?

            80,000 pages of new rules and regulations, is not businesses having the regulators in their pockets. American corporations moved headquarters to Ireland as they had lower tax rates. American corporations have nearly 2 trillion in profits held overseas, as a result of U.S. government tax policy.

            Capital goes where it is welcomed.

            Illinois raises a business tax and a major business then says it will leave. They then get an exemption, as Illinois can’t afford for the major business to leave.

            “The geography and demographics among many European counties (not
            enough poor desperate people) don’t favor rapid economic growth.”

            Socialism doesn’t favor rapid economic growth. Take the month of August off, as the car commercial says. A co-worker on vacation in Paris, ran into one of their strike demonstrations. Being on strike does not favor rapid economic growth.

            Mike Shedlock noted that Italy has the largest number of small businesses among European countries, as regulations make it counterproductive to hire more employees. Evey time they reach a certain employment threshold, they must do X or Y.

            Shedlock also posted about an italian business owner who moved his company to Poland because his factory “had not turned a profit for five years and he was being strangled by high salaries, crippling taxes and dismal rates of productivity.”

            Dismal rates of productivity do not favor rapid economic growth.

            Earlier
            this month, the owner of an electrical components factory in the north
            of the country waved his employees off on their summer holidays. Then,
            without informing them, he moved the entire operation, lock, stock and
            barrel, to Poland.

            Fabrizio Pedroni, 49, said he was driven to the drastic course of action
            because his factory, located near the city of Modena, had not turned a
            profit for five years and he was being strangled by high salaries,
            crippling taxes and dismal rates of productivity.

            Moving the factory to Eastern Europe was the only way of saving his company, which was founded 50 years ago by his grandfather.
            Read more at http://globaleconomicanalysis.blogspot.com/2013/08/wal-mart-is-not-costco-so-why-should-it.html#3pPGueD7XD8OK1TY.99
            Earlier
            this month, the owner of an electrical components factory in the north
            of the country waved his employees off on their summer holidays. Then,
            without informing them, he moved the entire operation, lock, stock and
            barrel, to Poland.

            Fabrizio Pedroni, 49, said he was driven to the drastic course of action
            because his factory, located near the city of Modena, had not turned a
            profit for five years and he was being strangled by high salaries,
            crippling taxes and dismal rates of productivity.

            Moving the factory to Eastern Europe was the only way of saving his company, which was founded 50 years ago by his grandfather.
            Read more at http://globaleconomicanalysis.blogspot.com/2013/08/wal-mart-is-not-costco-so-why-should-it.html#3pPGueD7XD8OK1TY.99

            Earlier
            this month, the owner of an electrical components factory in the north
            of the country waved his employees off on their summer holidays. Then,
            without informing them, he moved the entire operation, lock, stock and
            barrel, to Poland.

            Fabrizio Pedroni, 49, said he was driven to the drastic course of action
            because his factory, located near the city of Modena, had not turned a
            profit for five years and he was being strangled by high salaries,
            crippling taxes and dismal rates of productivity.

            Moving the factory to Eastern Europe was the only way of saving his company, which was founded 50 years ago by his grandfather.
            Read more at http://globaleconomicanalysis.blogspot.com/2013/08/wal-mart-is-not-costco-so-why-should-it.html#3pPGueD7XD8OK1TY.99
            Earlier
            this month, the owner of an electrical components factory in the north
            of the country waved his employees off on their summer holidays. Then,
            without informing them, he moved the entire operation, lock, stock and
            barrel, to Poland.

            Fabrizio Pedroni, 49, said he was driven to the drastic course of action
            because his factory, located near the city of Modena, had not turned a
            profit for five years and he was being strangled by high salaries,
            crippling taxes and dismal rates of productivity.

            Moving the factory to Eastern Europe was the only way of saving his company, which was founded 50 years ago by his grandfather.
            Read more at http://globaleconomicanalysis.blogspot.com/2013/08/wal-mart-is-not-costco-so-why-should-it.html#3pPGueD7XD8OK1TY.99
            Earlier
            this month, the owner of an electrical components factory in the north
            of the country waved his employees off on their summer holidays. Then,
            without informing them, he moved the entire operation, lock, stock and
            barrel, to Poland.

            Fabrizio Pedroni, 49, said he was driven to the drastic course of action
            because his factory, located near the city of Modena, had not turned a
            profit for five years and he was being strangled by high salaries,
            crippling taxes and dismal rates of productivity.

            Moving the factory to Eastern Europe was the only way of saving his company, which was founded 50 years ago by his grandfather.
            Read more at http://globaleconomicanalysis.blogspot.com/2013/08/wal-mart-is-not-costco-so-why-should-it.html#3pPGueD7XD8OK1TY.99
            Earlier
            this month, the owner of an electrical components factory in the north
            of the country waved his employees off on their summer holidays. Then,
            without informing them, he moved the entire operation, lock, stock and
            barrel, to Poland.

            Fabrizio Pedroni, 49, said he was driven to the drastic course of action
            because his factory, located near the city of Modena, had not turned a
            profit for five years and he was being strangled by high salaries,
            crippling taxes and dismal rates of productivity.

            Moving the factory to Eastern Europe was the only way of saving his company, which was founded 50 years ago by his grandfather.
            Read more at http://globaleconomicanalysis.blogspot.com/2013/08/wal-mart-is-not-costco-so-why-should-it.html#3pPGueD7XD8OK1TY.99
            Earlier
            this month, the owner of an electrical components factory in the north
            of the country waved his employees off on their summer holidays. Then,
            without informing them, he moved the entire operation, lock, stock and
            barrel, to Poland.

            Fabrizio Pedroni, 49, said he was driven to the drastic course of action
            because his factory, located near the city of Modena, had not turned a
            profit for five years and he was being strangled by high salaries,
            crippling taxes and dismal rates of productivity.

            Moving the factory to Eastern Europe was the only way of saving his company, which was founded 50 years ago by his grandfather.
            Read more at http://globaleconomicanalysis.blogspot.com/2013/08/wal-mart-is-not-costco-so-why-should-it.html#3pPGueD7XD8OK1TY.99
            Earlier
            this month, the owner of an electrical components factory in the north
            of the country waved his employees off on their summer holidays. Then,
            without informing them, he moved the entire operation, lock, stock and
            barrel, to Poland.

            Fabrizio Pedroni, 49, said he was driven to the drastic course of action
            because his factory, located near the city of Modena, had not turned a
            profit for five years and he was being strangled by high salaries,
            crippling taxes and dismal rates of productivity.

            Moving the factory to Eastern Europe was the only way of saving his company, which was founded 50 years ago by his grandfather.
            Read more at http://globaleconomicanalysis.blogspot.com/2013/08/wal-mart-is-not-costco-so-why-should-it.html#3pPGueD7XD8OK1TY.99

          • The poster formerly known as t

            “Capital goes where it is welcomed.”Capital goes where it is untaxed and where people are desperate and miserable. That says all about capital that needs to be said.

          • r2bzjudge

            “Capital goes where it is welcomed.”Capital goes where it is untaxed and
            where people are desperate and miserable. That says all about capital
            that needs to be said.”

            There is more that needs to be said than that. No capital, no business, no jobs. Like being unemployed?

          • The poster formerly known as t

            Somehow, humans got along fine before capitalists. Humans didn’t need capitalists to give them jobs because they were self sufficient and did not have to give the fruits of their labor to many middle men, like we see in both capitalism, where the finance sector make more money than the productive sectors they prey on, and in totalitarian dictatorships that sometimes claim they are Communist. Unemployment is social construct. In un-civilized societies, there wasn’t enough surplus to allow a whole entire class of people to profit off of owning resources while systemically keeping a large segment of the population in some kind of bondage–that bondage could be literal, or debt-based. Capitalism is not that far removed from the older systems like feudalism. Capitalism did not overthrow the older systems but grew out of them. The difference between communism and capitalism is small–both systems tend to concentrate power among a tiny elite. The only reason why capitalism seems more humane is because you’re experiencing it along with quite a bit of socialism.

          • r2bzjudge

            “Somehow, humans got along fine before capitalists.”

            I am sure the serfs would be happy to know that you view that of them.

            “The difference between communism and capitalism is small”

            Tell that to those who lived under communism. East Berlin had to build a wall to keep people from leaving.

            “both systems tend to concentrate power among a tiny elite.” Any system is going to do that. Somebody is always in charge. History of civilization always talks about the Kings and Emperors.

  • Greg & Huan of Old

    Thanks Lector, and I am all for spending less – we could use a much smaller federal government. But where will we cut spending? The largest “discretionary” spending that we have is the military. Will we start there? Or are going to go back to the same old well of cutting benefits for the poor and middle class?

  • John Kerr

    One wonders whether the faculty at Harvard Economics Department should ask Professor Mankiw to resign after this performance. His main criticism on Professor Piketty’s thesis regarding r>g was that the wealthy heirs will spend the wealth. However, he provided no research to quantify this and I was surprised that Professor Piketty did not ask him for his data to support his statement. Anecdotally, I have heard billionaires on the radio pointing out that there is only so much that they can consume which rather fits with intuition but we have no data to support it. The point of Professor Piketty’s book is that he presents lots and lots of data which is hard work. To have the head of department of Harvard Economics department behave like this is truly embarassing and Tom Ashbrook should have stepped in to ask for the data justification as Professor Piketty was apparently too polite to ask for data on this point. If one takes any conclusion from the book it is that we need to collect the data and make our choices based on the results of the experiments that we have done before.

    • r2bzjudge

      Lies, damn lies, and statistics.

      Data says the unemployment rate is 6.7%. That is if you don’t include those have given up looking for work and are not counted as unemployed. Intangibles were just added to GDP to goose the number. Did you know that if debt exceeds GDP, that GDP is actually negative? Nobody tells you that on the news.

      Data can lead anywhere that Piketty wants it to. He has a bias. Martin Armstrong refers to Piketty as the new Karl Marx.

      Supposedly Piketty want to tax the rich 80%. How are high taxes working out in France? Does Piketty bring up any of that data in his book?

      Gerard Depardieu, French actor, recently became a Russian, as he got tired of the high French taxes. That is the problem with Piketty. Nothing occurs in a vacuum.
      Depardieu becomes Russian and France gets NO taxes from him, thus tax collection goes down, not up, with a new 75% tax rate.

      When Bush Sr. was President, a luxury tax was created. Sales of luxury items dropped and people who made those items lost their jobs. Does Piketty talk about this sort of data in his book?

      Results of experiments. Wage and price controls don’t work. Piketty’s 80% tax rate is a form of wage control. As nothing happens in a vacuum, there is an equal and opposite reaction to every action. Does Piketty talk about that data in his book?

      • cuvtixo

        Depardieu is a lone individual who many French think of as a traitor. You can’t really extrapolate anything from one celebrity’s actions.

        • r2bzjudge

          Colonel Staufenburg, who placed the failed bomb to kill Hitler, was considered a traitor by Germans. He was finally postumously honored in his effort to help the German people.

          It isn’t just one celebritie’s actions. When the tax was originally announced, some French businessmen announced they were moving to Belgium.

          • Brian Laskey

            Godwin’s Law strikes again.

            What do the tax rates on the rich in democratic France have to do with the genocidal Nazi regime?

          • r2bzjudge

            “Depardieu is a lone individual who many French think of as a traitor.” That is what i was responding to. German people also considered Staufenberg to be a traitor for a time as well. He is now seen differently.

    • nearablackhole

      Mankiw is a brilliant man. Not sure I would have the guts to criticize him so freely without taking his courses first.
      Much of economics is theory, and the “data” is hardly from any controlled conditions. It is retrospective. So some theoretical projections may be valid in their reasoning.
      It is hard to watch some economic theories condemned from perches built upon them. Would we have the industrial tech we now possess without all of this? Like criticizing Apple by posting from one of their devices, how can this blog criticize capitalism so freely? It feels like sending others into battle to protect our freedoms, while condemning war as evil.
      We need to realize we are together in all of this. Competition is not a universally dark force, and winning comes with losing.

      • Greg & Huan of Old

        No one is attacking the Man – just his statements. Although I suppose it is not surprising that an economist from a very wealthy institution such as Harvard would defend the systems that enhance the wealthy.
        In the end, taxes are what we pay to live in a civilized society. The wealthy benefit from the roads, bridges, and safe country that we live in, and it is logical to conclude that they also benefit disproportionately from the poor. So if the rich are not taxed at a higher rate, they do in fact receive a subsidy from those who are less wealthy.

        • nearablackhole

          Not sure why you think I was not referring to his statements.
          Joe and Jim live at the end of a street. They each make $100 at their jobs, and each pay $10 of this for the building/repair of the street. Jim becomes ambitious and he decides to work two shifts instead of one. He now makes $200. Joe gets angry. He voted for Elizabeth Warren, another Harvard professor, and says because Jim makes more, he should pay more for the road. Jim does not understand, but agrees to pay more, now $12, and that allows Joe to actually pay less, namely $8.
          When the road tax bill comes, Joe now sees he pays 8%, but Jim only pays 6%. He also likes Warren Buffet, and says it is not right Jim pays a lower rate than he does. He demands Jim pay more again. Jim says this does not make sense, so he moves away to be with more reasonable neighbors. Of course, now Joe has to pay $20 for the road. At least there is less traffic. Maybe the pavement will last longer.

          • cuvtixo

            Really? How much did you contribute to WBUR this year? I’m betting that you haven’t contributed anything monetarily, and not much intellectually.

          • nearablackhole

            Ah, ad hominem, the last resort.

          • Greg & Huan of Old

            This is a silly example with many erroneous assumptions. I take offense to the notion that income is only about working harder. REALLY!? I grew up on a farm, and NO ONE works harder than dairy farmers, yet these farmers are struggling financially. Income distribution is not
            about effort, or about the idea that if you are struggling financially, it is
            your fault and all you need to do is work harder!
            So in your example, all the rich people will move out of the US? Seriously? All that Piketty and Warren Buffett and many others are saying is that we need to level the playing field so that most people have a reasonable shot at improving their lives. You seem to think we need to give people incentive to improve their lives by not taxing the rich more, but I am saying we need to give people incentive to improve their lives by giving them hope that they will have a reasonable chance to do so!

          • nearablackhole

            I am sorry you do not understand the analogy. The idea that people should be charged the same “rate” may be based in an assumption that is untrue. The example illustrates this. For instance, some wealth MAY be based on the fact that someone works harder. Not all may be. But how do you fairly assess a tax when that is the case?
            Many needed commodities do not have this same fairness demand. Does the gallon of milk at the store cost ten times as much for the person who makes ten times more than another? (Please don’t give workability arguments. It is just an example.)
            Piketty does suggest a global “wealth tax”
            A consumption tax may be more reasonable, because it does not lend itself as much to loopholes/corruption.

    • Human2013

      Mr. Mankiw’s lack of discernment and detachment from reality is probably what’s occurring everyday on Elite Campuses across this country. They have truly convinced themselves that everything is going just fine. At Yale, some 35% of the graduates are going into finance — as if finance creates something other than “funny money.” The problem is in the academic psyche of America.

  • hypocracy1

    EAT THE RICH

  • r2bzjudge

    “Where in the %$#@ are we supposed to get the money to improve education if we do NOT tax the wealthy at a higher rate?”

    It isn’t money that is going to improve education. On a smaller budget, the Catholic schools in NYC can turn out better educated students.

    • Greg & Huan of Old

      My daughter goes to a Catholic school here in rural Wisconsin, and I agree that she does get a better education than at the public schools (as evidenced by the fact that several public school teachers have their kids at the Catholic school). But the teachers there are paid less than the public school teachers – about $28,000 or so a year. That is not much money to raise a family on.
      Just so I understand, your answer is cut spending to schools and somehow make them better? Because as we all know teachers are paid way too much for what they do, right?
      But let’s take this back to the issue at hand. Do we have a problem with wealth concentrating in the hands of a few who have all of the political clout and not a clue of how the rest of us live? For the life of me, I do not know how, if you just take a look around you, especially in rural America, that you could conclude that this concentration of wealth IS happening, and that it IS detrimental to both the average American’s way of life, and to Democracy. If you think that the French Revolution cannot happen again, just go ahead and let this trend continue.

      • r2bzjudge

        “Just so I understand, your answer is cut spending to schools and somehow
        make them better? Because as we all know teachers are paid way too
        much for what they do, right”

        As i said, it isn’t money that is going to improve education. The catholic school didn’t somehow make it better. What they did worked, as you yourself acknowledged from your own experience.

        It is you that wants to interpret that my answer is cut spending to schools and that teachers are paid way too much.

        In NYC, there are teachers who have been removed from classrooms and are paid not to teach, because the union prevents the school system from firing them.

        The Los Angeles school district wants to spend 1 billion dollars to buy an iPad for each student. For a family with three children that would come to around $1,200. That is on top of whatever the per pupil expense already is. How long until the iPads break down and costs go up even more?

        Let’s talk about France. They have a high tax rate and it is still not enough, which is why Piketty wants 80%. When 80% isn’t enough, he will want 90. It is never enough.

        But the new 75% tax has driven Gerarde Depardieu out of the country. On the announcement of the tax, some business men said they were moving to Belgium to live.

        Hollande said he would make it expensive for French businesses to fire workers. So French businesses simply won’t hire workers then, since they can’t fire them. Counter productive.

        “But let’s take this back to the issue at hand. Do we have a problem
        with wealth concentrating in the hands of a few who have all of the
        political clout and not a clue of how the rest of us live?”

        If concentration wealth is THE problem, why Does Hollande want even more than the high rate that the French were paying already? Hollande wants to spend more and more.

        You could take 100% of Bill Gates fortune and how long would it fund the government? How far would 76 billion go? The government budget is 3.8 trillion this fiscal year. The 6 month fiscal deficit is 314 billion dollars. The national debt is 17 trillion.

        It will never be enough, for those who want to spend other people’s money.

    • cuvtixo

      That was because nuns got paid so little. The generation that last provided such cheap layer is dying off and the Catholic schools will start going downhill fairly quickly

      • r2bzjudge

        What you seem to be saying is that Catholic schools will go down hill because they will become too expensive for parents, due to higher cost for teachers.

        Children do not learn because the teacher is well paid. They learn because of the manner in which they are taught.

        • The poster formerly known as t

          Not everyone learns the same way. Catholic schools have the privilege of kicking students who perform unsatisfactorily, out.
          Aside from the three Rs, much of education is about proper socialization and indoctrination.

  • RolloMartins

    Wish On Point had someone with real street cred as an economist for this show to speak to Piketty. Someone like Stephanie Kelton. Here is a take on Piketty from the Univ of Missouri-Kansas City: http://neweconomicperspectives.org/2014/04/pikettys-regressive-views-public-debt-potential-impact-book.html

  • Zack Smith

    Not a fan of Greg Manikiw (hack) but he made a valid point. Our focus shouldn’t be wealth inequality, rather it’s the standard of living inequality. Let’s be honest – the middle class today live better than the royalty of 150 years ago. The 1% do not live THAT much better than the middle class of today. Using the government’s measurement of poverty, most of the poor in the USA live better than the upper class of 150 years ago; they probably own a car, have their own home, air conditioning, better food and better entertainment. Let’s keep this in perspective; there is far too much envy on display in this discussion.

    • Cutler Hamilton

      Comparing the poor to the upper class status 150 years ago misses the point completely. We’re all living in 2014. It’s time we all figure out how to provide “living equality” for the country and then the rest of the planet. And saying the 1% do not live much better than the middle class today just smacks of ignorance to those who struggle to maintain that “middle class”.

      • Zack Smith

        I think it’s all relative and many of the posters lack perspective.

        • Cutler Hamilton

          I know you need to have perspective for some aspects of this issue but comparing lifestyles across 150 years of history doesn’t bring solutions to the table. Many families who were considered “middle class” just a few years ago are now just getting by paycheck to paycheck. Many people know that. The problem is DC and even most of the state legislatures can’t agree on how to deal with it. So they just let it fester and squabble over who donates what their campaigns that are constantly on go because we have elections every two years. This problem would not exist if SCOTUS had not approved Citizens United which allowed for even more money to be donated to politicians through SuperPACS. Thus the wealthy (who can afford to donate mass sums of money) get richer and have a voice over the middle class and poor (who cannot afford to donate to politicians) lose their voice. One problem leads to another and so on.

    • Freda Ezulie

      150 years ago in 1864 who drove cars , who had air-conditioning ?

      Steam cars in 1769, Fuel gas cars in 1805 and Gasoline cars in 1885. but because cars were just being brought out, and even wealthy people might not have had cars.
      ( Downton Abby) it is hard to make comparison wealthy people had it pretty good during that time. Great clothes , jewelry, art, and servants, big houses. Hey who needs a car?

    • Alchemical Reaction

      This argument is a logical fallacy since standard of living increases ignore the correlation of a rise in anxiety. What does it matter how high your standard of living is, if you are always scared of losing your house or being unable to pay your rent?

      It has also recently been proven that poverty actually lowers one’s ability to make good decisions. This is brain research. There was a report on NPR about it recently.
      So, standard of living doesn’t really matter if you don’t feel you have any control over your life and you always have anxiety.

      Zack, you are ignorant. Go back to school.

      • cuvtixo

        Good points.The lower middle class individuals of 150 years ago might have had little chance of becoming rich, but they had, or at least felt they had, a good chance of maintaining a certain standard of living and not slipping into destitution.
        In the US now, keeping steady paycheck coming in and putting away for retirement is very difficult, and a serious illness, for example, can bring a family into bankruptcy very quickly. Not a good formula for social stability.

        • pete18

          “but they had, or at least felt they had, a good chance of maintaining a certain standard of living and not slipping into destitution. ”

          Really? How do you know that?

    • Human2013

      What the poor live with is anxiety and uncertainty everyday — they don’t own a plot of land like people did 150 years ago — they rent a small space that can be revoked at any time — Get real.

  • Alchemical Reaction

    Binary Economics.

  • Gregory Walsh

    I’m not sure how Prof. Mankiw proposes we improve education outside of increasing the uneven funding to our countries k-12 schools. Ask a graduate from a top notch science program at a major university which paycheck they would prefer; that of a financial analyst or that of an urban k-12 teacher. If you’re serious about reducing inequality that’s great, in fact as an urban school teacher I am completely on board but I doubt it will be achieved without funding entire school systems at a level that is commiserate with your goals. Where is that money going to come from? Corporate handouts, philanthropy? Here is where Prof. Manikw can’t escape making a value judgement, does he value the quality of life and access to sufficient education of the bottom 2/3s of our citizens enough to admit that it is more important than the obscene concentration of wealth that goes completely beyond saving enough for the trust funds of the top 10%. Does he really believe that real improvements to education are going to come from anywhere other than tax dollars. Furthermore, does he believe that our economic system as it exists today, with the high value it places on capital accumulation and greed can support the educational system we deserve without addressing these ridiculous (high) levels income stratification and (low) levels of economic mobility and instead simply instituting a progressive “consumption” tax. That doesn’t work if the majority of wage earners don’t have enough income to contribute significantly to the tax base. I believe that there is hubris in ignoring the historical record. The extremely wealthy and the system they benefit from only works if the middle and lower class wage earners are surviving and relatively content. If balance is tipped so far that life because unbearable then the wealthy have tended to see an end to their way of life, any history book will tell you that.

    • Daniel

      Education can be improved pretty quickly in three ways:

      1) Shift some of the focus away from k-12 and towards adults. I’ve met far too many adults who either cannot help their childen with homework, are too tired after work to help and are completely lost in terms of educational enrichment for their children. Having worked at a school for intellectually gifted students, I can tell you that for the most part they were no more intelligent than their peers at other schools. The big difference was that many had parents who were professionals and had done several things over the years to enhance their education. Better trained/educated adults can serve as better stewards for their children, be flexible enough to change jobs so that a job has lower value than the worker and instill the value of education in the youth (something I think a lot of kids in underperforming schools lack).

      2) Stop bowing at the alter of the college degree. A guy from MIT learned the same laws of physics as a guy from a state school. We also have to accept that college is not the best option for everyone and should instead focus on providing people with a way to attain skills that the free market will pay for. I hate to say it but you’re more likely to find consistent work if you know how to weld than if you have a masters in biology.

      3) Tie corporate incentives and tax rates to companies participating in the education process. Today’s students, be they adults or kids, are going to be tomorrows workers so it makes sense for future employers to play a role in ensuring that workers are highly skilled and educated.

  • Matt2525

    It makes me nervous when people talk about the “wealthy” and are referring to millionaires, or even people with six figure incomes. This is the middle class, but everyone’s so poor these days, these income ranges can seem like extravagant wealth. Forget the 1%. Our real problem is the 0.00001%.

    • Human2013

      Yes, your absolutely correct. It’s very difficult for Americans to wrap their heads around a figure like $33,000,000,000 — It’s surreal. How can you make $40000 and think you are middle class or have a net worth of – $100000 and believe you’re in the middle of $33,000,000,000 (Waltons). Too much pride and noise from the right — there are two classes: the working class and the investor class.

    • JR_08

      It makes you nervous that *millionaires* are perceived as “the wealthy”? You think the millionaires are “the middle class”? That’s delusional. If you have a million dollars, you are in the top 3% of global wealth holders.

      Middle class is defined as the income bracket in the middle of income levels. The world’s richest people are decidedly, absolutely NOT “the middle class.”

      • Matt2525

        Mean incomes are the wrong figure to look at. You can’t just keep moving the goal post to pretend like the U.S. still has a thriving middle class.

        • JR_08

          Average incomes are not the wrong figure to look at. That’s what middle class means. By definition. It’s the median or mean income, or living standards.

          Middle class doesn’t inherently mean white picket fence in the suburbs. Middle class doesn’t mean never having to worry about affording full, nutritious meals. Middle class doesn’t mean sending all your children to 4-year universities without going into debt. Middle class doesn’t inherently mean anything – it means what’s in the middle. And it especially doesn’t mean anything when examining *global* wealth and the *global* middle class. The global middle class lives on just a few dollars a day. Millionaires are the world’s rich.

  • http://web.mac.com/deweaver Dallas Weaver

    He is successfully selling envy. He confuses power, wealth, “true wealth” and contractual income.

    “True wealth” is control over the disposition of assets. If you can get a private jet to take you where I want, when I want, whether that plane is owned by you and show up as part of your netwealth or is a DOD plane and you am a General makes no difference except as a General you don’t have buy the plane or pay the taxes, pilots or maintenance. The richest man in the world can have no assets in his name and pay no wealth tax.

    If you have cash in the bank for retirement, he want to tax it away, but if you have a retirement contract from the government (fat government pension) whose actuarial value is much greater than the retirement cash wouldn’t be taxed. This confuses wealth with contractual income saying one version is taxed and the other is fine. His belief on taxing wealth is a form of theft from
    the individuals to those with lush government retirement plans.

    He worries about the influence of wealth on power and the long term
    nepotism of inherited wealth, but forgets that politics is far more
    nepotistic than CEO’s. Very few CEO’s get their children to replace
    them (remember Wang computer) but everyone from Gore to Brown and Bush seem to be siblings of politically connected.

    Any two bit Senator can demand to have Bill Gates come to him and pay tribute, but can Bill Gates demand that a Senator come to him? That says where the real power is. The wealthy, like the barons of old that Piketty discusses pay tribute to the King or, now days, leaders of the political class. As Gates knows, if you don’t pay tribute you get an anti-trust law suit that goes away after you pay tribute to the political class members on K street and on the hill.

    • ExcellentNews

      Gates is one of the few billionaires who does not really play the game of political cronyism. Why don’t you talk about the Koch brothers or Rupert Murdoch who ARE controlling the direction of our country against the will of the majority?

  • ExcellentNews

    More programs like this please! How blind we have grown. It takes a foreign economist to see us for what we are becoming – a new feudal society, where a handful of billionaires rule over a throng of indentured peons. The mechanisms of rulership and indenture are new, of course, but their effect is the same. The elimination of the middle class. The end of democracy and enlightenment.

    We need more programs on these new rulers. We need the people to hear about them, to know about them. We are not talking here about the doctors who work hard and then manage to save a few million dollars to retire in a condo in Hawaii. We are talking about those who have built billion-dollar fortunes from offshoring US jobs to slave-labor dictatorships. Who have amassed trillions in Cayman Island accounts from predatory lending. Who own media empires that sow division and misinformation amongst the peons. Tell us who they are. Tell us how they “made” their money.

    Tell us, so that the peons realize that they are the ones making the wealth. Because NO human (except maybe a few scientists and engineers pushing the boundaries of invention) is doing work that individually is worth the fortunes you don’t hear about but which control our country and our fate. The wealth of the Kochs, Murdochs, Nordquists, and the hundreds of anonymous global oligarchs comes because they have the POWER to control the labor of the BILLIONS of us. Wealth makes wealth. And just like Mr. Piketty states, this cancerous growth will destroy democracy, freedom and justice. You have seen it since the 90s. You feel it in your gut. Get informed to UNDERSTAND it.

    • Human2013

      Well said. I’ve had so many mind boggling debates with co-workers from the right. Every world that spills out their mouth, moves against their own self interest and the interest of their children. I’m always respectful and have tried countless times in different angles to explain the erosion of American wages. However, we always end back at the same place — It’s the governments fault. I don’t know where to begin with them, but if we can’t convince them, we don’t have a fighting chance.

  • Brian Laskey

    It was stunning that Gregory Mankiw simply could not bring himself to answer the questions put to him about the fact that in America today, as made explicit by our Supreme Court, money is equivalent to political speech, so any great imbalance in wealth will implicitly be an imbalance of political power for the wealthy.

    • Alchemical Reaction

      That’s why we need Binary Economics.

  • Alchemical Reaction

    I’m not saying the rich shouldn’t be taxed. I AM saying there are better ways to do it.

    Consumption taxes are more effective at capturing revenue and more fair. Also, the rich spend more. And when income taxes are too high, they simply flee to greener pastures (reside in nations where there are no income taxes.) We want them spending here!

    1. LOWER INCOME TAX for EVERYONE. (Income tax should be a sliding scale 1% – 15%.)

    2. Capture revenue more effectively by creating a National Sales Tax 10%. (slightly higher for imports).

    3. Create a national credit union to make low-interest (interest-locked) business loans that require only intellectual capital as collateral (demonstrate business education, and present AND DEFEND a viable business plan) do not require credit for approval, and feature revenue-contingent payback.

    4. Make a tax code that favors cooperative corporations, employee-owned firms, and profit sharing plans.

    5. Require that for everyone with a net worth over 10 million dollars, at least 5% of their total wealth MUST be engaged in capitalistic endeavors. Discourage money from sitting stagnant when it could be used to produce a product or service, creating jobs and more wealth. (This also has the effect of taking the bite out of the liberal “scarcity” argument that “there is only so much to go around.” That’s not how it works, since the economy and banking is exponential (fractional reserve lending)

    Rather than socialist Robin Hood Economics, simply Make it easier for the poor to BECOME wealthy.

    Binary Economics.

  • Regular_Listener

    I think Piketty makes the excellent point that economic growth is not necessarily dependent on inequality. In the USA we have been sold on this idea, that for there to be growth – for the rising tide to lift all boats – some have to do better than others. And to a certain extent, this is probably true, but it does not follow that there has to be increasing inequality, or great inequality, for there to be growth. He makes the important point that the 19th century featured both lower growth and greater inequality than the 20th century.

    • r2bzjudge

      First of all, equality doesn’t exist. I cannot play a violin. I cannot do calculus. Others can. I can do things they cannot do.

      A major Hollywood actor is going to earn $20 million dollars to star in a movie. A major company CEO may earn 20 million dollars. A small business owner may make just enough to live on or enough for a comfortable living.

      It is not that some have to do better than others, it is that some do better than others. Apple Computer was failing until Steve Jobs went back to the company he founded.

      One of the problems that is going on with income inequality is corruption of the free market. Goldman Sachs gets bailed out, the FED makes credit cheap to those first in line and government favors large corporations over entrepreneurs. The market is being distorted.

      Technology is also changing the landscape. I have read that more jobs are now being eliminated by technology, than technology is creating new jobs to replace them.

      A call center can be moved from Iowa to India, but one can now ask Apple’s Siri, questions, so how long until a call center in India is replaced with artificial intelligence?
      All manner of jobs are subject to elimination as technology moves forward. I was reading a comment the other day that a recently new burger chain has a computer software system which manages the employees, talking to them through headsets. That is another issue that society is going to have to deal with- a permanent displacement of enough jobs of any type, for people to do.

ONPOINT
TODAY
Aug 28, 2014
Photos surround the casket of Michael Brown before the start of his funeral at Friendly Temple Missionary Baptist Church in St. Louis, Monday, Aug. 25, 2014.  (AP)

The message that will last out of Ferguson with New Yorker writer Jelani Cobb.

Aug 28, 2014
Some of the hundreds of earthquake damaged wine barrels cover and toppled a pair of forklifts at the Kieu Hoang Winery, Monday, Aug. 25, 2014, in Napa, Calif. A powerful earthquake that struck the heart of California's wine country caught many people sound asleep, sending dressers, mirrors and pictures crashing down around them and toppling wine bottles in vineyards around the region. (AP)

Drought in California, earthquake in Napa. We look at broken bottles and the health of the American wine industry.

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Aug 27, 2014
Russian President Vladimir Putin, left, shakes hands with Ukrainian President Petro Poroshenko, right, as Kazakh President Nursultan Nazarbayev, center, looks at them, prior to their talks after after posing for a photo in Minsk, Belarus, Tuesday, Aug. 26, 2014. (AP)

Vladimir Putin and Ukraine’s leader meet. We’ll look at Russia and the high voltage chess game over Ukraine. Plus, we look at potential US military strikes in Syria and Iraq.

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