Why Are Economists Giving Piketty the Cold Shoulder?

The most ardent fight against tyranny and overlords comes from aristocrats who wish to be equal - but just to each other, not to the common herd (thank you very much, goodbye my good man).

What is this world in which income / wealth / opportunity is 'equal'? Is this a world we want to live in? What are the rules of this world? What steps need to be taken on the policy front to achieve this world? Are those steps that the anti-inequality elites are willing to undertake?

Not as much as a marketing problem, but has populist political organizations that use it to advance their superficial socialist causes.

They have annual data that makes more sense.

http://www.tradingeconomics.com/bulgaria/gdp-growth-annual

Take a look at your numbers again. You have made multiple mistakes. Your 8.4% annualized rate is wrong - You can't just take the start and end points to calculate an average. Plus, you are plugging quarterly data into yearly calculations.

If nothing else the absence of a theoretically desirable wealth tax serves as a justification for progressive income taxes and higher capital gains taxes.

I have not seen a definition of capitalism which was not either contradictory, or which relied on sufficiently general abstractions (utility instead of profit, social contracts and monopolies on force instead of states).

The level of authoritarian control you would have to have over a society in order to prevent a system of government from forming would certainly itself qualify as a system of government. So free enterprise always generates some sort of governing actor, and any mandate that results is, by the transitive property, the result of free enterprise. Since all systems are ultimately the result of free enterprise and "rational" motives, it's hard to argue that "Capitalism" is anything but the trivial classifier, if it is well defined.

I'd argue that the successful policies that Americans incorrectly attributed to the "capitalism" were actually attributable to the sort of meta-philosophy of pragmatism. Which is the philosophy of not really having a philosophy, and never letting any belief become sacred (A philosophy which we certainly do not adhere to now).

http://www.politico.com/magazine/story/2014/06/the-pitchfork...

We'll need the "low level" jobs, e.g. cleaners. Given the cost of automation, it's just not interesting enough to automate this. We'll also need the high level jobs, e.g. anything that requires significant (creative) thinking to some extent. Unique creative thought is probably the only thing that can't be automated at the moment.

Most traditional middle class jobs can easily be simplified / removed / etc. For each job that's created in software development, two traditional ones will disappear. We're optimising the world.

Tl;dr: Most people, imo, haven't realised the world is changing. The people voting Trump / UKIP / Brexit / Le Pen are (unless someone gives me a good argument) fools for thinking the people they elect can actually change things. I'm not saying they haven't been left behind, or there are no legit concerns, but to think these people can change things.. that's just ridiculous.

For example: I dare say Trump doesn't give a flying fuck about what he had to do to get elected. He picked out 5 or 10 focus groups that would give him the necessary votes to win, and focused on those. He won't deliver. He just wanted to be president.

It isn't a solvable problem, honestly, is the big secret no one really wants to admit.

Capitalism, by its nature, is going to chase efficiency globally regardless of what you do to prevent it. Technology, over time, is going to make this worse because it is easier to avoid inconvenient regulations by operating out of "friendly" countries as well as enabling automation that really only leaves "services" that pays very little for many people who used to have better options.

The truth is the Middle Class is going to shrink no matter what you do and you are going to basically end up with a very large gap of people making 6 figures (who can afford to hire people to handle things for them) and less skilled people who will be reduced to jobs servicing them that barely pay above minimum wage.

People don't like "income redistribution" but that is the only way to actually solve the problem long term. It needs to be done in a way that working is still incentived but where those relatively low paying service jobs + the redistribution leaves people with the housing, food, and health care they need.

The reality is, the bottom 50% in most countries need about 20% of the national income to be happy...and in the US they are getting about 12%.

The problem is, right now, that is politically impossible outside of a handful of European countries.

First, you're using some poorly defined terminology that seems to cater to your implicit biases. What, exactly, do you mean by "smart people" and "dumb people"?

Second, you have some arguments here that seem like non-sequiturs. What does it matter that Elon Musk slept at his office? Does a janitor get bonus points for sleeping in the broom closet instead of at his apartment?

Third, the doubt you're raising about self-made billionaires is off topic. That is an interesting phenomenon in it's own right but isn't something Piketty wrote about because it wasn't the topic of his research.

Fourth, your own personal correspondence with Piketty is irrelevant and a distraction. It signals (to us, I suppose) that you care a lot about this topic. The fact that you care a lot doesn't help make your arguments more persuasive.

Finally, the tone of your post here is filled with appeals to emotion, exasperation, and frustration. You're having trouble making cogent arguments because you seem to be heavily invested in your own feelings about this subject. Those feelings are fine, and natural, but they do not make for a cogent argument. There is no point in attempting to persuade others that you are correct by mentioning that you really care a lot and have a lot of emotional investment in the subject.

Actually he has addressed this, and the answer is relatively little. Most wealth in the world is passed down from one generation to the next, growing at a rate faster than the economy in general. Many of the richest families in the world from centuries ago are still the richest families. Other than in small pockets of the world, like silicon valley, new money is pretty rare.

Well, there are a bunch of practical difficulties, beyond just political will.

First, "wealth" is much harder to cheaply and objectively quantify than cash income. The value is often very subjective, and changes over time and circumstance.

Even a lot of "what's it worth right now" statements are flimsy: A guy might have X stock in a company worth $Y, but it's only a "if things go right" $Y because if you try to sell it all at once you'll cause a panic among investors and get fairly little for it.

Lastly, it's much easier for people to hide their current wealth, when they have an incentive to lie about it and have years to do it in. You'd need a financial panopticon to make sure nobody's burying gold in their garden while telling the tax man they spent it all on expensive food.

You don't reach 30% effective rate (single) until you make $500,000, at which point you're pretty well off. :)

First, he made a lot of methodological errors, like using tax data as a proxy for income and then not adjusting for a change in tax treatment between one year and the next in the 1980s.

Second, more fundamentally, he's computing inequality without accounting for taxes and transfer payments, i.e. the things that we do to ameliorate inequality, e.g. food stamps, the EITC, and the entire Social Security, Medicare, Medicaid complex. I seem to recall that employer-paid benefits which are excluded from tax, like health insurance benefits, are also excluded.

At the high-level, in terms of big theoretical flaws, he posits this broad "when rate of return on capital exceeds the growth of the economy the rich just get richer" theory which is fine until the rich person dies, gives most of his assets away to charity, loses half of what's left to the death tax, and has more than one heir. People sometimes joke about how economists make a bunch of ridiculous assumptions in their models, and "people live for ever" is actually one of them, and it actually makes sense most of the time (because it usually doesn't affect what you're modelling), but this is the case where it affects what you're modelling.

This all started in 2014, so some of it may have been improved or corrected since then, but Picketty's popularity is still independent of any actual measure of facts or truths in the world. It's related to confirmation bias of the listener. This is why he is used in politics so much. (This isn't special or specially bad; it's why anything is, really. But see it for what it is and look to science rather than politicians for a fight on the facts.)

... with a Nobel prize, to boot.

We judge science based on testable theories and results, and the quality of the work done to make those results trustworthy. Pruitt may heavily flunk that part, but any intelligent person who doesn't can contribute to science, regardless of their background.

And the solutions are simple, just uncomfortable for those who aren't poor.

You make it sound as if Zuckerberg was a Lovecraftian Great Old One. Wait a minute..!

Source? This sounds like a pet theory rather than anything substantiated, especially since there's plenty of evidence of inequality among younger people. (Or were you saying that people get richer as they get older? It's not clear.)

> To a certain extent, inequality is the price of liberally allowing divorces and children outside marriage.

Are you actually saying that, to fight inequality, we need to stigmatize divorce and extramarital sex more? Or are you just saying that inequality is an unavoidable consequence of allowing divorce, and there's no point trying to fix that?

Off course since it is not a complete theory, it does not consider the above as major factors in wealth accumulation leading to inequality.

That said, each feeds into another.

A risk free 0.1% doesn't look like you're being an employer though.

It sounds like the rate that comes from your deposits at a bank (which lends your deposits to make money, which in some way most likely depends on them getting a higher rate of return on capital than growth in output)

One problem with this idea is that the factors that determine what's meant by a "very comfortable life" will necessarily have to be decided by politicians and bureaucrats and imposed by force. By distorting (if not entirely removing) the effects of economic competition, a system of that nature turns the problem of achieving material success into an almost-purely political one.

When people who don't actually create value are given excessive power over people who do, economic progress stops. We've seen the outcome in enough places, from the Soviet Union to modern-day Venezuela, that it almost seems inevitable: the rich still get richer, but the rising tide that's supposed to lift all the boats never seems to come in.

The fact that you can consistently get higher growth in an index fund than GDP is just a symptom of r > g. It incentivizes you to save. But this simple example also ignores volatility in stocks, GDP can drop by 3% and index funds can drop by far more. Also is it really taking advantage of other peoples work if they go through a public offering and offer to sell you the stock of their own free will?

If you want a system where r = g, you are requiring some sort of top down wealth allocation system to cap r, (a morally and legally supreme government...socialism?). I'll avoid that system.

If you think it's actionable perhaps you could suggest an action?

If you think no micro action is meaningful, does this mean you would be comfortable walking up to a homeless person and saying that you're not going to bother helping them with their problems because no matter what they do, r > g and they're screwed? That's a pretty lame excuse, I'd feel bad saying that.