Monday, June 2, 2014

Piketty and the Austerity of Imagination


Thomas Piketty’s recent book Capital in the Twenty First Century has gotten rave reviews and has been proclaimed by many liberal and progressive pundits and scholars as the best thing since Marx.  Piketty’s central claim is that the return on capital (investments, real estate, rents) will always exceed the return on labor unless some extraordinary shock occurs, like a world war or depression.   In laymen terms, this means that rich people who can inherit and invest their wealth will always make more than everyone else who has to earn their money through labor. The solution Piketty proposes to this inevitable growth in inequality is a global wealth tax, which he himself says is utopian and unlikely.

So why is this book so popular with liberals?  One possible reason is that it displays moral indignity in the face of wealth inequality, but it does not ask any of us to change or do anything.  It also gives the reader a strong sense of historical knowledge of the global economy, but this understanding is plagued by several glaring blind spots.  As Thomas Frank has pointed out, in a book on labor and capital that goes on for close to 700 pages, the role of unions is barely mentioned.  Moreover, the incredible destructive nature of the 2008 global financial meltdown is also ignored, and most of his statistics only focus on a small number of countries, and this is due to his reliance on a narrow set of tax data.  In short, Piketty is blinded by his own limited source of information and his own ideology.  Although he looks like a Occupy Wall Street proponent, he really is locked into a moderate austerity mindset.

Since he believes that the only thing that can cause income from labor to exceed wealth from investments and inheritance is a war or massive depression, he promotes the logic of austerity: we will never have strong economic growth, so all we can do is try to tax the wealthy and reduce social benefits like pensions.  If this austerity logic sounds familiar, it is what is driving the thinking of the White House and the State House.

What is missing from this austerity of imagination is any hope that we could expand economic growth by increasing the wages of working people.  While Piketty justifies the Federal Reserve lending trillions of dollars to banks and corporations to stabilize their books, he does not even ponder how some of this money could have been used to refinance mortgages or student debt.  Like Piketty, the Fed does not think that the government can do anything to spur economic growth and job creation, and so the only alternative is to feed money to the investment class who have decided that we no longer need consumers or workers since businesses and banks can make money by just buying back their own stocks from cheap government loans. 

What we need are policies that help to create better high paying jobs so we can increase consumer demand and create even more economic growth.  However, companies have found that they can increase their profits, stock valuation, and executive compensation by reducing labor costs, and this is done in part by hiring people part-time with low wages and no benefits.  Since most workers do not have any bargaining power and do not belong to unions, there is a global race to the bottom as everyone loses ground to inflation except for a small number of managers and investors.   

11 comments:

  1. A valuable comment, Bob. One might add that we have taken small, inadequate, but essential measures against income precarity by loosening the link between employment and income for the elderly and disabled and, modestly, through the EITC. We need to think about a future in which more and more people must find income security elsewhere than from paid labor at starvation wages. Mary Furner

    ReplyDelete
  2. Replica Louis Vuitton handbags are aswell actual accepted because, the appearance usually keeps alteration and gucci replica replica handbags and added items advice you to be kept clip with the latest fashion. In added words, artist handbags and purses become out of date soon. This is why, replica Louis Vuitton handbags, purses and wallets are added applicable than the aboriginal one. You can calmly buy several replica handbags and louis vuitton replica added items at the bulk of an aboriginal one. In added words, replica Louis Vuitton handbags accommodate you with the befalling to allow in awful avant-garde appearance of handbags and purses after spending a acceptable bulk of money.For accepting these replica items, there are a amount of chanel outlet online stores. These food not alone accommodate you with Louis Vuitton handbags, but aswell an array of replica Louis Vuitton handbags, Louis Vuitton Replica Purses, Louis Vuitton Replica Wallets and Louis Vuitton Replica Accoutrements at easy-on-the-pocket prices with adorable discounts. For accepting your adapted piece, all you accept to replica chanel do is just seek over the internet and baddest a store.Handbags are advised as an basal fshion accent that anniversary beautiful woman demands to possess, analogous accurately with her clothes. Meticulously congenital from brought in covering calm with abutting application to accomplishment and detailing, Louis vuitton Replica duke accoutrements accept developed to be the acerbity amidst account acquainted women that await on abreast affairs while not compromising acceptable feel.

    ReplyDelete
  3. The solution Piketty proposes to this inevitable growth in inequality is a global wealth tax, which he himself says is utopian and unlikely. who can do my marketing essay

    ReplyDelete
  4. Currently on the market, there are abounding varieties of mortgage loans available. Sometimes it can be difficult to acquaint which mortgage adaptation is acceptable and applicative to you.
    Cash Advance San-diego

    ReplyDelete
  5. When i notice something that's great and very helpful i always like being attentive. This is a blog that many can learn from, thank you very much for sharing. Editing services I can trust

    ReplyDelete
  6. Utilities -If your gas or electric bill is due and you don't accept a paycheck advancing until abutting week, you may demand to accede a payday accommodation to pay your account bill and accomplish abiding that you don't lose your account account because of non-payment. This will additionally accumulate your acclaim address chargeless of backward acquittal marks.
    Cash Advance Chicago

    ReplyDelete
  7. One of the employments of this credit is to unite collected obligation, for example, charge card obligation or payday advance obligation. In the event that you wind up making least installments on the greater part of your remarkable bills every month, these advances can offer assistance. payday loans

    ReplyDelete
  8. Ensured Student training credits or government advances with much lower financing costs can't be blended with private non-ensured advances with much higher loan fees in a private schooling advance combination. payday loans

    ReplyDelete
  9. Very good web log guide using this area! And also just lately inside your web log a couple of times at present. Freezing had to suggest greetings and even reveal a bless you in the tips bless you. Nowadays go here payday loans spring-valley Bless you designed for attractive guide writing.

    ReplyDelete
  10. INSTEAD OF GETTING A LOAN,, I GOT SOMETHING NEW
    Get $5,500 USD every day, for six months!

    See how it works
    Do you know you can hack into any Credit cards machine with a hacked Credit cards??
    Make up your mind before applying, straight deal...

    Order for a blank Credit cards now and get millions within a week!: contact us
    via email address:: {Legitblankcardsonline@gmail.com}

    We have specially programmed Credits Cards that can be use to hack Credit cards Machines
    Nation Wide, the Credits Cards can be used to withdraw at any Credits Cards or swipe Machines, at
    Stores and POS Machines. We sell this cards to all our customers and interested
    buyers worldwide, the Credit Card has a daily withdrawal limit of $5,500 at any Credit cards Machines
    and up to $50,000 spending limit in stores depending on the kind of card
    you order for. Credits Cards Can also be used in any other cyber hack{Services}, we are here for you anytime any day.

    Here is our price lists for the Credits Cards:

    Cards that withdraw $5,500 per day costs $200 USD
    Cards that withdraw $10,000 per day costs $850 USD
    Cards that withdraw $35,000 per day costs $2,200 USD
    Cards that withdraw $50,000 per day costs $5,500 USD
    Cards that withdraw $100,000 per day costs $8,500 USD


    make up your mind before applying, straight deal!!!

    The price include shipping fees and charges, order now: contact us via
    email address:: {Legitblankcardsonline@gmail.com}

    ReplyDelete