Thomas Piketty’s plan to fix the economy | Hacker News Reader

Thomas Piketty’s plan to fix the economy

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34 pointshhs48 comments

Piketty’s solution is that we move beyond private ownership to some blend of private, public, and temporary ownership. (Total abolition of private property, à la Soviet Union, for Piketty, was an ill-advised failure.) Since many societal goods are often already owned publicly, like electrical grids, highways, or parks, and some are owned communally, like worker cooperatives, it is easy to imagine this realm expanding.

1800 words into the article and finally we get the grand plan.

Like the rest of Piketty's work, yell real loud about a real pain, make interesting allusions to economic history, and offer no real solutions.

I am still unable to fathom why he thinks inequality is a problem in and of itself. Hunger, famine, war, disease, we all understand are bad because they have negative consequences on real human lives. Jeff Bezos owning 12% of Amazon does not make me any worse off and if he owned 11% instead it would not make my life any better.

Now there are certain things that can that can contribute to people accumulating excessive amounts at another person's expense. Regulatory capture and economic cartels for instance. But those are never brought up by Picketty's breed. Their issues is that someone owns more than someone else. I suppose my advice to Picketty would be that if he is going to commit one of the seven deadly sins, he might choose a funner one than envy.

> I am still unable to fathom why he thinks inequality is a problem in and of itself. Hunger, famine, war, disease, we all understand are bad because they have negative consequences on real human lives. Jeff Bezos owning 12% of Amazon does not make me any worse off and if he owned 11% instead it would not make my life any better.

Massive income inequality impacts social and economic mobility within a society. If 1% of the population owns 40% of the wealth, it means a disproportional amount value labor provides is going to a small group of people.

Labor doesn’t create all value.

That's not what the GP said. Could you please review https://news.ycombinator.com/newsguidelines.html? Note this one:

"Please respond to the strongest plausible interpretation of what someone says, not a weaker one that's easier to criticize. Assume good faith."

Also the ones about substantive commenting and ideological battle. The last thing we need is another Marxism flamewar.

Where does value come from besides labour? If gold was everywhere, it wouldn’t be as valuable as it is - but it’s not, you have to dig it out of the ground and it can be hard to find; the labour input into the process of producing gold is what gives gold its value. A silicon rock is about as useful as any other rock, but the labour which goes into fabricating it into useful components is what gives it its value. A hammer is useless without an arm to swing it. Even when that arm is attached to a semi-autonomous machine, its sole purpose is to reduce the time expenses by human labour on some material - this devalues human labour in the abstract (not a bad thing of course, in fact crucial for our social and technological development), but at the end of the day the process reduces entirely to human labour producing value.

Where does value come from besides labour? Land, investment, time value of money, management, freedom of commerce, etc... LTV was known baloney 100 years ago.

You can actually "reduce" any expense entirely to several things if you think reductionistically enough: energy costs, material scarcity, etc.

Labor is one possible resource bottleneck, and because it can be intuitively converted into most other resources with some imagination, it is often mistaken as transcending other resources.

Labor Theory of Value has been broadly discredited for this reason among many others.

Each of those things ultimately reduce to human labour though. Energy because it requires human labour to produce; material scarcity because of the human labour required to extract certain rare materials. It’s very easy to say that this is mental gymnastics, but do you honestly disagree and think that these disparate things are categories into themselves? - how can we then determine the relative value of things, it becomes a matter of comparing apples and oranges. You can look at the utility of some commodity, but that will only ultimately tell us what a person will pay for it, and value does not always correlate to cost.

Yes, we can reduce energy needs to human labor; we can also reduce human labor to energy needs. I invite you to try out the exercise. Since both are substitutes for one another to a significant degree much of the time, it's easy to get trapped into the thinking that they're always substitutes. The reality is that despite their fungibility, you tend to reach the limits at an extreme (think like a Cobb-Douglas function).

And yes, the disjunction between market value and cost is well-known. They only converge under certain market assumptions, an interesting subject of study in itself.

As a resident of a former communist country I can tell you, from my country experience, that labor is definitely not enough to create any value. You need two other things:

1. Savings which you can use as a capital to improve the efficiency of labor - think buying tools before you start working.

2. Proper organization of work, which is the task of entrepreneurs. Without them people can work hard and produce no value at all. It happens everywhere in the world today, where some bureaucrats get the power to decide what people should do. It happened a lot in all communist countries, where large parts of people's effort were under their control.

If people's labor was everything you need to create value, then why are people in North Korea starving? Do you suggest that they don't work hard enough?

These things reduce the input human labour required to produce some good. They are inputs to the process of production, but do not themselves produce value. In fact, as I mentioned, they may well diminish the value of some product, because they reduce the abstract human labour required to produce it.

Your second question isn’t really helpful ... the simple answer is sustained famine in the 90s, poorly maintained land, and market forces.

The worst thing is that it is not the inequality of wealth that matters. It's the inequality of power.

What Piketty and others of this philosophical movement believe is that taking money away from people is the same as removing power.

They are going to be disappointed. Power is a capital item, not a revenue item. Money gets you the contacts with the right people. Lack of money doesn't remove them.

Plus, of course, there isn't a fixed amount of wealth - particularly not financial wealth. So why confiscate when you can accommodate?

Lack of money absolutely does remove them. Billionaires like Murdoch and the Koch brothers have had a massive detrimental effect on US politics (and British, in the case of Murdoch). Without the capital they control, they wouldn't have anywhere near that kind of impact.

Not every billionaire uses their money for that kind of power, but some do, and it hurts democracy when they do. In fact, it's even been argued that legitimate philanthropy is undemocratic, because it's rich people deciding which problems society will fix, rather than a democratic process.

If money only provided luxury, people would have less problems with this inequality. And people would probably be less interested in amassing more wealth than they can consume.

Counterpoint: Michael Bloomberg recently spent almost half a billion dollars trying to convince people to make him a presidential candidate. How did that work for him?

What a lot of people don’t seem to understand is that propaganda doesn’t cause beliefs, it focuses and amplified beliefs that preexist at least in nascent form. The Koch brothers would have no power if there weren’t people ready for their kind of message. In fact this is a good example. The Koch Brothers were against the Trumpian turn in Republican politics and spent heavily against it. How did that work out for them?

Sorry money == power is too facile.

There are effective and ineffective way to use your money for power, of course. But many US politicians work for their wealthy donors. Most Senators are millionaires, no presidential candidates are poor.

The fact that some rich people only get part of what they want because they're opposed by other rich people, does not mean that their money didn't get them power. The Koch brothers got a lot of what they wanted.

And even if poor people, if there are enough of them and they are sufficiently organised, are able to oppose rich people, that still doesn't mean that the rich people don't have more power individually. Their resources make it much easier to organise, to buy influence and support, to reward politicians who legislate the way they want.

In the US, even more than in other countries, money is absolutely power.

Though he might handwave at this notion of "power imbalance", you and I both fully understand that this is not the core issue driving his philosophy. Someone making $120k a year can afford to hire a lobbyist in their state legislature. Should no one make $120k?

If there were no billionaires would the so called "power imbalance" be restored? Does someone with $900 million not have the power of someone with $1 billion? Of course not.

And money doesn't linearly equate with power. There are a number of powerful people in Washington, even unelected ones, who have no substantial fortune to their name yet wield far more power than say Jack Dorsey, Bill Ackman, or Marc Andreeson. If Piketty was truly against all concentrations of power, he would call himself a libertarian.

But Piketty is not against concentrations of power. The core idea behind Piketty's philosophy is a moral one. He believes that some people having a significant amount more than others is a moral failure in society, and must be corrected, even at an economic cost.

People in Washington (or elsewhere) who wield a lot of power without being rich, wield that power because it has been delegated to them. They are accountable for that power. Rich people are not, but probably should be.

The problem isn't merely the concentration of power, it's the concentration of unaccountable power. This is also why people are upset about secret courts and lack of congressional oversight over secret services: it withdraws accountability from an institute wielding power.

>People in Washington (or elsewhere) who wield a lot of power without being rich, wield that power because it has been delegated to them. They are accountable for that power. Rich people are not, but probably should be.

I specified the qualifier "unelected"

There are more kinds of delegated power, though.

It's very easy to make the logical leap that increasing inequality is equivalent to "the rich get richer and the poor get poorer". And most people don't necessarily have a problem with "the rich get richer" part, but they do object to "the poor get poorer".

It is a leap though. Bezos, Gates, Musk, Buffet, Page, Brin, Zuckerberg all started as regular people and became ultra-rich through their work and ideas.

But it's not a complete fallacy either. If you are a real estate owner in New York City, your assets continue appreciating at a good pace, well above inflation, and you have a vested interest in NIMBY, which does indeed restrict social mobility.

Social mobility, or social mobility opportunity are harder to measure though, so a lot of people are ok with using the inequality as a proxy. I do agree with you that it's an imperfect proxy, and focusing on it can have negative side-effects.

I'm pretty sure that all of the people you note had middle-class to upper-middle-class parents, so potentially you are proving Piketty's point.

We can do a random search through the founders of various unicorns. My first hit was Brian Chesky [1], one of the Airbnb founders. His parents were social workers. Stripe was founded by two brothers who were born in Limerick, Ireland. Maybe they were middle class in Limerick, but most likely not rich by global standards. They are now worth $3BN each [2]. Instacart was founded by Apoorva Mehta, who was born in India, and whose parents immigrated to Canada in 2000. Apoorva doesn't have a wikipedia page, but again, very likely his family was not rich.

If you go through the wikipedia unicorn list [3], you'll find many founders that appear to be from middle or upper-middle class, but also many founders from lower-middle class as well.

[1] https://en.wikipedia.org/wiki/Brian_Chesky

[2] https://en.wikipedia.org/wiki/John_Collison

[3] https://en.wikipedia.org/wiki/List_of_unicorn_startup_compan...

Like, I appreciate your investigations, but none of those people were mentioned in the original post to which I responded.

Mark Zuckerberg: father was a dentist; solidly upper-middle class Bill Gates: mother on the board of IBM, upper-middle class

I won't try to talk about anyone except the Collison brothers, and given that I was born somewhat before them in the same country, I can assure you that they were solidly upper-middle class by Irish standards. Also, please note that Patrick Collison attended MIT as an international student, which is not something that poor people do.

Economic inequality (and erosion of middle class) is water to populists' mill. We have living examples of this right now.

My issue with statements like this is that there is no such thing as the "middle class". It's a political concept, not an economic one. It has no definition. Furthermore, if you try to define it the way is usually defined - as the people making between x% of the median - it is mathematically impossible for it to shrink so long as the population continues to grow.

Slavery is the most extreme case of inequality. How close do you need to get to slavery before inequality is a problem?

Slavery is a basic human rights violation... Jeff Bezos owning $100B in Amazon stock is not. Piketty is obviously not writing abolitionist literature

The problem in, and of itself, is not that Jeff Bozos has 100B, it is that by Jeff Bezos having 100M, he is able to bend the political environment to benefit him. creating more wealth and reducing the wealth of others. The tax code is a great example of that. Piketty's book, clearly demonstrates that.

By the way, for every "Bezos", there is a Walmart Heiress who simply chose the right womb to come out of, and while Bezos may have "built" Amazon, he needed early investors, e.g. that Wal Mart Heiress for example, to start that instead of going to public markets.

Then the solution should not be to take Bezos share in this business. Like I said earlier, there is no clear point where someone's wealth stops giving them influence. The solution should be to increase the rigidity of government. But Piketty does not advocate that.

You don’t seem the type to be persuaded to a progressive tax system or a change to property rights. So unless you have a different proposal to fix the system, assuming you even recognize it as a problem, their really isn’t anywhere to go from here.

Pretty sure this just makes you a fucking moron.

Personal attacks will get you banned here, regardless of how ignorant someone else is or you feel they are.

If you wouldn't mind reviewing https://news.ycombinator.com/newsguidelines.html and using HN as intended, we'd be grateful.

Please follow the rules of this site.

Piketty is a fool. End central banking and lender of last resort. That is it. There will still be a natural order of poor and rich just like every other natural system but it will not be as extreme and it will not reward the wrong people

Please make your points without calling names. Maybe you don't owe Piketty better, but you owe this community better if you're posting to it.

https://news.ycombinator.com/newsguidelines.html

No thanks, I'm good

In a voluntary society, why don’t people who advocate for things like the abolition of private property (the thesis of the linked article) just create this themselves?

Absolutely nothing stops a group from creating a non-profit, electing a board of trustees that appoints managers, and signing lifetime contracts to pledge their income to it. Then the board and it’s managers can divvy up the income among everyone fairly, build communal housing, negotiate to provide health benefits for all at group discounts, provide retirement income, etc. And if people sign on when they are young, then some will become more successful and provide more income for the whole.

This is the same as taxes, except even better because all group members are ideologically aligned and would be happy to give all their income away to an elected group of people who will spend it on everyone fairly. And this way, people who don’t want to participate aren’t forced to do so.

"Absolutely nothing stops a group from creating a non-profit, electing a board of trustees that appoints managers"

We have done. They're called nations.

Other nations are available. You're not forced to stay in the one you are born in. That's enshrined in the United nations charter on human rights.

> That's enshrined in the United nations charter on human rights.

Good luck turning up at $country’s port of entry with that as your only immigration document.

That's a straw man isn't it.

The UN charter enshrines your right to leave a nation. And that's all it enshrines.

It's more the port of exit that is the issue.

Fair point. Being stateless may very well be an improvement.

The nation is quite unlikely to radically increase taxes and outlaw private property. Why not create this system yourself among like-minded people?

They tried that in Waco. Didn’t work out so well for them. It turns out that you can’t really escape the tyranny of the government. Might as well suck it up, and have strong property rights. At least that is a check on government tyranny.

How is it? Who grants these 'rights' and who enforces them?

Distributed enforcement always ends up being who has the most and sharpest pointy sticks. Centralised enforcement is called "government"

Pick your poison.

The norm of private property rights gives citizens a powerful tool against government overreach. Norms alter how power is legitimized and as such make new things possible---it's not just about pointy sticks.

It is, in fact, always about pointy sticks, which becomes shockingly apparent any time norms and the desires of those with the pointy sticks diverge too far, and having and consistently applying pointy sticks with a given rule is a very powerful method of establishing norms aligned with the stick holders desires, which then reduce the need for pointy stick holders to stick people with the sticks.

(This fact is also why a number of people have a strong preference for the norm of the wide distribution of pointy sticks, to try to better align the desires of those holding pointy sticks with general norms.)

The fact is people are forced to participate in our current society. There is more freedom than in Cuba, but there are still huge number of things constraining my freedom, how I can use it, how much would cost to exercise this freedom...

How capital and revenue is unequally (and many says unethically) shared in our current system, and how it is structured to favor people who have more capital, create many huge constraints for most people, while favoring few.

The goal of Pikety and of many others is to change the rules of the game, the rules we are force to live with and that have huge impact on our freedom.

Starting a non-profit does not change the rule of the game, it change only the way we live with the rule.

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