Thomas Piketty’s Radical Plan to Redistribute Wealth | Hacker News Reader

Thomas Piketty’s Radical Plan to Redistribute Wealth

nytimes.com

51 pointscee_el123108 comments

Just want to point out two things:

1) Rognlie[1] pointed out that Piketty's central premise -- that the returns to capital are growing faster than the overall growth rate of the economy -- falls apart when you properly account for asset class and depreciation. The accelerating returns are specifically to real estate, while the returns to capital (excluding real estate) are flat.

2) Tyler Cowen pointed this out on his interview [2] with Piketty and Piketty essentially conceded the point.

Tyler implied therefore that the natural conclusion is Georgism[3]

[1] https://www.brookings.edu/bpea-articles/deciphering-the-fall...

[2] https://conversationswithtyler.com/episodes/thomas-piketty/

[3] http://gameofrent.com/content/is-land-a-big-deal#a-brief-rec...

Georgism just makes more and more sense the more you think about it. The idea that people should be allowed to profit off unimproved land is so clearly immoral, and that’s not to say anything for the efficiency Georgism brings and the amount it would help lower rental costs.

I don't see how Georgism solves anything. You need a government to enforce taxation - said government is profiting off unimproved land. Said governments colonize and take others land with force.

Governments that tax unimproved land can reduce taxes on income and spending.

Point being that society loses nothing by increasing taxes on unimproved land except an opportunity for parasitic wealth extraction whereas by taxing spending you lose valuable and productive economic activity.

For the greatest political impact the money from a land value tax should initially be given to poverty stricken pensioners.

Let's say you taxed unimproved land at 1000%. What's the result? No one will hold it. OK, great you say. The government won't develop it. It'll sit there, owned by the government, unimproved.

Great. What has been accomplished exactly? Georgism is not the solution. Relaxing zoning laws and bureaucracy is. Private money already wants to develop their unimproved land if it's economical to do so. If it's not, taxing them more won't accomplish anything other than result in the land going back to the government, who will do nothing (historically) with it.

I dont believe anybody has ever suggested taxing it above 100%.

100% is the level whereby 100% of the profit a landlord makes will be due to the quality of the improvements and 0% will be due to land speculation.

A landlord owning a shitty building in a hot location will lose money. Hopefully a lot. That is by design. They sell up, somebody demolishes it and builds something better and denser and therefore makes a profit.

>Private money already wants to develop their unimproved land

All the private money in the world isnt enough to convince land owners in San Francisco to demolish their low density housing and build high density housing to accomodate all the people who want to live there.

Tax them on the land and not only will they stop NIMBYing private money at every opportunity theyll sell up gladly to property developers to avoid paying their eye watering LVT bill.

> All the private money in the world isnt convincing land owners in San Francisco to demolish and build apartment blocks to accomodate demand.

This has nothing to do with tax. Just change the laws. smh.

Plenty of people want to develop their land in San Francisco. Here's one example: https://reason.com/2018/02/21/san-francisco-man-has-spent-4-...

Again, private money already wants to develop. Taxation is not necessary. Remove the red tape. Government involvement is the problem not the solution.

It has everything to do with tax - specifically prop 13 which DEtaxed land and led to California's ridiculously inefficient land use.

Those property owners with $3 million houses will do everything in their power to prop their value up. That means inhibiting high density development. That means pretending a laundromat is "historic".

With a 100% LVT their houses arent worth $3 million theyre worth exactly as much as an equivalent house in Omaha.

There is no point in NIMBYing to inhibit housing with stupid shit like pretending a laundromat is a historic building. Inhibiting development wont drive up property prices. Change those laws and others will be abused.

But those people with $3 million houses will do ANYTHING to prevent an LVT.

you make absolutely no sense. the so-called power the NIMBYs have was given to them by the government.

> With a 100% LVT their houses arent worth $3 million theyre worth exactly as much as an equivalent house in Omaha.

and this is just wrong.

>the so-called power the NIMBYs have was given to them by the government.

Yeah, I mean the land owners got together and tried to declare a laundromat to be a historic building.

The problem here isnt so much with historic buildings OR the ability of people to club together to save them like you seem to think.

The problem is that a group of landowners abused that process to protect their net worth... which is high thanks to them owning a sliver of very valuable extremely untaxed land in the vicinity.

The more it is taxed the less valuable it is. If it's not valuable any more suddenly they wont give two shits about "historic laundromats".

The government is always the biggest obstacle to improving land. People try very hard to improve their land and the government puts up tons of red tape. We need less government involvement, not more, and certainly not more in the form of a harebrained utopian scheme like Georgism.

The government is the people. The government puts up restrictions to building because that's what people want. NIMBYism is hyperlocal politics backfiring by incentivizing people to prop up their land value at the expense of everyone who wants to move there. LVT incentivizes landholders to densify, so they will stop lobbying the government to ban building.

I, like Rognlie, can make the lines say what I want to dissuade change to status quo.

He’s still just one man. There’s no need to listen to him.

I’d rather listen to the majority who are being fleeced by thought ending men like Rognlie. “Oh but don’t think to change things; see look here is other math!”

Humans don’t exist in a vacuum of externalities; Rognlies advice makes it seem so. Fidgeting with the numbers doing nothing real for the people in need is no different than “thoughts and prayers”.

Story mode still rules, as we keep setting aside work of value to people for the story of how some people earned their status. I don’t care what Rognlies credentials are; he’s one of seven billion.

I applied my masters in elastic structures to design power distribution equipment for people. Rognlie sits and pontificates. Screw him.

I'm with you

although the language of that Brookings article is obscure ( possibly deliberately )

it seems like he's nitpicking rather than acknowledging something's deeply wrong.

plus it's strange the way he quotes himself in 3rd person in the article he himself wrote

Actually, Piketty doesn't concede this point and makes the extremely important distinction between aggregate wealth and wealth distribution. What Rognlie does point out is the incredible importance of real estate in the growth of capital income - far more than Piketty originally credited it with in Capital in the Twenty-First Century. As Piketty points out in the interview, an explanation based around real estate literally cannot explain the growth in wealth share of the top 1% or top 0.1% or top 0.01%, because the wealthier you are, the smaller a percentage of your wealth consists of real estate. Which then naturally leads to the conclusion that Georgism/land value taxes are an insufficient tool for combating extreme inequality.

Also, non sequitur: while I enjoyed A Brief History of Equality, I feel that it tried to stuff too much historical detail into so short a work - it reads a bit like a condensed version of Capital and Ideology. I found the most enlightening parts of Piketty's previous works involved the tracing of political and economic minutiae across time and space, and I'm not sure I would have actually enjoyed A Brief History of Equality if I didn't already have that background.

More importantly, Piketty studied this and wrote a paper on it. This is the quote from Piketty on [2] from OP:

"PIKETTY: If you look at the top of the wealth distribution, I don’t see a lot of real estate. I don’t think Matt Rognlie or anyone is saying that the huge rise in billionaire wealth in the US has anything to do with real estate. As far as I know, nobody has ever tried to put this theory on the table.

"I’m not saying real estate is not important. I think for middle-class assets and lower-middle-class and upper-middle-class assets — for the middle of the distribution — real estate is, of course, very important. The movement in real estate prices explains a lot of what’s going on, both in terms of aggregate value and distribution. I’m not saying it’s not important. It is very important.

"If you go back to our paper with Gabriel Zucman, which was published, now, almost 10 years ago in the Quarterly Journal of Economics in 2014, called “Capital is Back: Wealth-Income Ratios in Rich Countries, 1700–2010,” you will see, we have complete decomposition about the role of real estate in aggregate wealth accumulation, and it’s absolutely central for many countries over many periods of time."

I often really like this community, but I have found people here especially prone to falling to the "meritocracy trap". ie.: believing they are mostly where they are because of ability, worthiness or hard work, rather than mostly luck.

That's really unfortunate, and results in a lot of non-self-aware political bickering.

I often really like this community, but I have found people here especially prone to falling to the "no-dissapointment-in-my-life-is-ever-my-fault trap". ie.: believing that they are where they are due to vast and well-executed systemic conspiracies rather than mistakes, missteps, or a simple lack of motivation or ability.

That's really unfortunate, and results in a lot of non-self-aware political bickering.

The difference between my comment and yours is that the meritocracy trap is a real thing that has been the subject of scholarly works. Also, I speak not from a place of disappointments, but rather from a place of great privilege. I am extremely lucky to be where I am (and yes, I worked hard for it too).

For an overview and references, see:

- https://en.wikipedia.org/wiki/Myth_of_meritocracy

- https://en.wikipedia.org/wiki/Meritocracy#Meritocracy_trap

You are arguing against a strawman here. Nobody claimed we have a perfect meritocracy.

Nobody claimed this directly, but when you boil down most progressive policies to their naked objective, it comes down to redistribution in one form or another, taking from the rich and lifting everyone (most noticeably lifting the poor).

Most objections to progressive policies boil down to the idea that the more fortunate people deserve what they have, and that redistribution would make less fortunate people not work as hard. In other words, the world is unfair because of "hand-wavy general incentives".

I am aware that second paragraph was not a great steel-man, and there are many variants and nuances of these positions, but generally the implicit assumption is that we have good (I did not say perfect) vertical mobility, when in reality this is not usually the case.

user: tharne said

> believing where they are due to well executed systemic conspiracies rather than their mistakes, missteps, or a simple lack of motivation or ability

the implication certainly is that if you don't make mistakes, missteps, work hard and have talent - in other words if you are full of merit - you'll assuredly end up in a good place

sounds like saying we live in a meritocracy

"no-dissapointment-in-my-life-is-ever-my-fault trap"

I am one of those people who certainly missed the boat due to my own missteps, mistakes, lack of motivation

But let's talk about those who don't/didn't have the favourable circumstances and opportunities I had/have

Is not being able to afford / be-accepted-for a life changing college degree that person's fault 50% of the time ? is it their parents' fault ? is it the grandparents' fault that the parents weren't better off ? if so ... where does this blame game stop ? at some point govt/society needs to step in and give you a boost regardless of your background

debatably, inheritance & land ownership are well executed systemic conspiracies

mistakes, missteps, lack of motivation, are all fine - but "lack of ability" ? you're arguing against yourself there - if there is such a thing as lack of ability - that's certainly a terrible reason to disqualify a person from having their basic needs met

> if there is such a thing as lack of ability - that’s certainly a terrible reason…

I think this is a good point. Nobody should be disqualified, and there are in fact many programs available to help people achieve their personal best.

Community college is an excellent stepping stone, as are vocational training programs. These are available in some states at a very low cost.

There is self-affirmation in achieving completion of any project, and completion of a training program that enables one to work, to create, to contribute and to develop self-agency is a wonderful thing to do.

Government is constantly giving people a boost. Need-based grants for college, for example. All sorts of welfare programs. Food stamps. Unemployment insurance. Housing vouchers. Social security and Medicare in retirement.

I’m not sure what kind of society you are arguing against, because it’s not the one we have.

On the contrary, the view that life outcomes are due to circumstances and luck leads to the denigration of success and competition, abdication of responsibility for one's life choices, and ultimately to really bad economic policy that will make everyone worse off.

We now see this kind of thing even infecting our education system, and it's driving a lot of liberal people to the political right. Look at how Asian American voters acted in the recent San Francisco school board recall, for example. (Also: try telling those people that their success in our society is due to luck, even though they came here in poverty and were discriminated against every step of the way...)

On the contrary, the only way to be successful while not putting in a lot of hard work, is to start off from a very fortunate place.

The idea is that we want the system to be more meritocratic, and that a good place to start is to acknowledge that it's currently not as meritocratic as we tend to think. That's what the "meritocratic trap" is: thinking we have meritocracy when we don't.

> even though they came… in poverty

That was always reductionist. Many emigres from China, Japan, Korea, USSR states, the Middle East and India arrived with high education levels. For 20th century society, where war could blow up or seize all your assets, education you ship with you in your brain is wealth that matters. Lots of uneducated people left behind in those countries, they just died or their life sucks now.

Indeed, and access to education is in fact one of the biggest barriers to vertical mobility in the US.

Can you please provide some data to back up this assertion?

It is true that life situations (poverty, lack of parental assistance, safety and security, cultural roadblocks, etc.) are impediments to successful participation in school.

But is “access to education” a a demonstrable problem? Many states offer very low cost or free access to community college higher education.

There's about a million different ways you could do a PhD on this subject: data on this question is not missing.

Some search queries I recommend (just as a starting point):

- "Factors in access to education"

- "Access to education causal"

- "Access to education in America"

- "Access to education world data"

- "Access to education developing countries"

- "Public education and vertical mobility"

- "Relationship between education and innovation"

- "Relationship between education and health"

- "Public health and economic productivity

- "Access to education and marginalized groups"

Here is a website for the ACLU that you can use as a reference. If you believe that any child is being denied access to education, the ACLU is a good place to go to get assistance in getting justice:

https://www.aclu.org/other/your-right-equality-education

This is also really reductionist. “Good spots” were scarce in China, Japan and the USSR too. You could be (1) Asian in China, (2) cognitively capable (3) but still part of the group of 19 kids who didn’t get the 1 spot that 1 kid did. And you were fucked, and you didn’t emigrate.

The “racial or cultural superiority therefore black kids are fucked” thing you’re really believe in is stupid. It’s unactionable and nobody gives a fuck about that perspective. There are like a handful of legitimate ways to address the scarce spots for everyone not just high achievers, but the racial and cultural superiority people don’t spend even one iota of their time or one cent of their dollars making the good schools bigger. It’s a profoundly immature point of view, and its immaturity should give you insight for why people don’t like you.

I don't think the reference you provided makes the point you think it makes. The ACLU states that their mission is to fight for better access to education. Nowhere do they say that their job is done.

Piketty always has insightful commentary on the topic and I'll definitely be checking out this book. I think we'll come to recognize that R > G is an important influencer for social stability and long term prosperity.

That said, I do wonder if we're looking at inequality (or more specifically hierarchy) through the wrong lens. It seems like almost all independent societies naturally develop some sort of hierarchy (chief, priest, leader) without any outside influence. To me that points to some underlying natural law or at least a biologically-influenced tendency that higher level social constructs will be ineffective at changing.

Have you read The Dawn of Everything?

http://archive.today/tBPaM

Is there a single example in history where income redistribution worked while it was also easy for foreigners to enter the country and growth persisted for everyone while maintaining said ratios of acceptable inequality?

- If you don't allow foreigners, I'll argue that you haven't solved anything. You've simple picked the winners.

- If the ratio of inequality is disrupted, I'd also argue you haven't done anything other than move the problem (and the losers) to the future.

- If you decide not to redistribute, well that's the current situation for better or worse.

Personally I think a better problem to solve is for humanity in general to decide what the minimum level of prosperity should be, worldwide and slowly try to raise this bar. AFAIK this is basically what we're doing. We could raise the bar faster, though.

And who gets to decide what inequality is and why?

Good question - who should? Democratically decided upon I suppose?

That just sounds like a form of mob rule. That's why most democratic countries have some basic rights enshrined in a constitution rather than dependent on the will of the voters.

And where do the people get their information to decide?

Same way people get their information to decide now for anything democratically decided upon?

Therein lies the problem, because in order to coopt the democratic process, all you need to do is control the flow of information and the narrative.

To wit: https://www.webfx.com/blog/internet/the-6-companies-that-own...

I'm not sure what your point is - are you against democracy?

I like the idea of it but recognize that it is easily subverted.

The Republic model (not the one described by Plato) is the best solution we’ve found to date to deal with these flaws.

Is there a single example of any modern rich country where it is easy to enter?

The United States is relatively easy to enter. It's also relatively easy to enter China on a worker permit (not permanent resident).

:cough: H1B visa cap :cough:

I don't see why the effect of a policy should be judged with a so wide focus that it's considered worthless unless it helps the whole humanity and foreigners.

Policy is decided, implemented and evaluated on the level of societies, not on a global level. We have no global government, and the only global cooperation is voluntary, with wealth redistribution only happening as much as one society arbitrarily chooses to spend on charity and foreign aid for another. Social policies are not implemented worldwide but rather by some society for its own benefit, and if some policy makes a society successful, that's a great policy for that society. Leaders in democratic societies are accountable to people of their society about ensuring that their needs, desires and choices get met, they are not accountable to humanity in general but rather the people they represent, and in general these voters give a very limited mandate to sacrifice prosperity of their society to "raise the bar" of worldwide prosperity. If the society chooses to make policies that benefit everyone else, great, but if it does not, then the policy is good if and only if it fits the choices of that particular society. We can make a strong argument that there is a moral imperative not to harm other societies, however, ignoring them is an acceptable 'default' state of noninterference.

If doing something allows you to "pick winners" so that all of your society are winners, that would be great (certainly better than what we have now) and would have effectively solved things that matter for that society, even if it does not extend to the world beyond its borders.

What we have now is obviously not working. We have serious homeless problems involving children. That is plainly the mark of a state that is failing its citizens. There is more wealth around than we have use for (see: space yachts, meme coins, NFTs), so instead of leaving it to slosh around in stupid risky ventures, move it into pro-social infrastructure and health/education support services. There is more than enough wealth abundance to uplift the most disadvantaged while still allowing the wealthiest to live out their fantasies.

If some entity, be it the government or some other institution, is to take the responsibility of redistributing wealth by any means (taxation, welfare, rent control, etc.), does not that institution then bear the responsibility of determining what is equitable? Does this change over time?

And doesn’t that institution also bear the responsibility of the generational social and cultural impacts?

Does wealth redistribution reach stasis at a standard of living that is lower than is currently achievable? Does the golden goose eventually stop laying eggs?

Social engineering experiments can have many unforeseeable impacts - both good and bad. There is no guarantee that the ultimate results will be better than the starting conditions.

Whatever is done, it should be done slowly and under controlled conditions so that the impacts can be measured.

( submitting this as a reference to Piketty's whole school of thought not just the latest book )

( Discussion prompt: what are some radical ideas for slashing poverty/inequality globally in 2 decades or less - assuming the public support/political will can eventually be obtained through effort/luck )

Reduce rent seeking, promote local agriculture university outreach programs, gently trim back on waste, promote competition in stagnated fields.

There’s not a radical solution where something bold needs to be done. There’s a lot of mundane progress that needs to be done, but before it’s done it needs to be identified and prioritized.

a real attempt to reduce rent seeking would probably lead to civil war.

The feudal lords will call on their bannermen to take up arms via Twitter.

Reduce, not eliminate.

Put pressure though taxes, regulations, etc that benefit people owning things to do stuff with them and penalize people owning things to make money from somebody else doing things with them.

Investment will always be an important mechanism, it just needs to be a bit more disadvantaged than it is at the moment.

One of the mechanisms is as simple as taxing vacancy. If you own commercial or residential property that isn’t occupied, your taxes go way up to encourage you to drop prices until it gets used or you decide to sell.

People pay 50% of their income in taxes in states like California without rioting, so I don't see why attempts to reduce rent seeking would be any different. Any income generated from an land value tax is money that can be saved with less efficient forms of taxation. IMO, this has more to do with lack of economic knowledge rather than anything else. People don't realize that making housing affordable completely opposite from making it a good investment.

> a real attempt to reduce rent seeking would probably lead to civil war.

Agreed, but a failure to reduce it would probably lead to the same thing eventually.

Radical solutions elicit radical response, and are rarely warranted.

See for example the French Revolution. Millions of unnecessary deaths due to political repression and wars. And then, 80 years after it all started, finally achieving democracy. All because those in charge at any given moment cared more about their ideas than people.

If you think we can achieve utopia if only everyone signs on to your wonderful idea, it's a sign that you are not only wrong, but should seriously seek counseling.

100% inheritance tax on any estate value over $N (inflation indexed), use that money to fund "baby bonds" to give every newborn an investable trust fund.

Nobody should get to be rich because of who their daddy was.

This wouldn't force the rich to move elsewhere?

It would, so you also need capital controls.

A living person should want more people to be educated instead of living in poverty because that will increase their own lifespan. A dead person is not capable of caring where their wealth went.

I could not agree with this more.

It feels like trust fund babies are pretty much everything that the US is not supposed to be about. Whenever I'm in a mood to discuss politics and someone brings up the "death tax" I say something like: "I agree, the world absolutely needs more people like Paris Hilton." (Not to pick on Paris Hilton, but I think that she's a visible example that people resonate with.)

The question this brings up is this: instead of making it impossible for families to establish themselves for generations, instead encourage families to think and invest long-term, without having their accumulated experience and wisdom be made meaningless by having their resources stolen from them? Encourage people to have all-around healthy, well-raised children who will (if they so choose) carry on the and develop the family project instead of being, in effect, scattered to the winds. Rather than encouraging people to start public corporations (which are, in our current system, designed to be taken out of the hands of those who build and care for them, then eventually parted out), let's find ways to incentivize families to actually invest in their children and the future, instead of simply in building wealth that will be only temporary while hoping that maybe the kids will do fine. Encourage long-term thinking, planning, and investment by taking away the fear that all this work will be taken away or have to be sold off for taxes.

I'm not saying you can't raise your children to be healthy long-term thinkers or whatever strawman nonsense this is. You just couldn't give them 100 million bucks.

> Encourage long-term thinking, planning, and investment by taking away the fear that all this work will be taken away or have to be sold off for taxes.

I see exactly zero evidence that our current practice allowing obscene generational wealth is encouraging sound long-term thinking from our plutocract rulers.

You're blinded from seeing what could be done by the emotional reaction the $ signs are giving you. Look at the adjectives you have chosen — those are the bounds of your thought-space.

Consider the first point: yes, you can make them "healthy long-term thinkers", but without resources — especially when those resources are expropriated for the value of those with far different or far less long-range aims for them — it will only get them so far. I'm suggesting that encouraging long-term thinking on the part of individuals and their families, with part of that encouragement allowing them to build and maintain significant financial reserves and control of businesses, resources, etc., will have far more salutary effects than allowing those resources to be strip-mined for the sake of investors, corporate raiders, and government indulgences. What is currently lacking is an incentive for those who hold great resources to do more than either live large off of them or put them into ridiculous "charities" or "foundations" that end up doing very, very little of use. At least Carnegie built libraries; today's people buying their consciences back tend to purchase an assortment of politicians. Such a great use of resources.

It sounds like your thinking on this issue is confused by your own hatred of government and/or taxation. There would be absolutely nothing preventing wealthy people from building libraries or even putting their names on them.

Anyway, we are not going to agree: you think a handful of hyperwealthy families will be better for humanity in the long term; I think a broadly shared prosperity is better. I believe historical evidence is on my side, but that's a much longer discussion than I'm willing to have here.

Thing is, I don't want it to be a handful of families who benefit from this, but as many as possible. Give people a chance to build and far more than you believe will take advantage of this to make something good. I don't care about "humanity", but about actual people — and I want as many of them to have a chance, and to not simply to be lumped into an undifferentiated mass, as possible.

To be clear: I'm proposing something like "no one can pass on more than $1m (or whatever number) inflation-adjusted dollars to their kids". Realistically, this policy would only affect a tiny fraction of extremely wealthy families. (Reminder for HN readers: the median household net worth is something like ~$70k)

If you say you care about actual people, you should care about giving more of them a chance, and worry less about protecting the non-existent property interests of the dead.

> Nobody should get to be rich because of who their daddy was.

Why? It is non-obvious to me that we should have a collective say in why the rich become rich.

land and natural resources are limited in supply

they're also a big part of how humans fulfil the basic necessities of life

why should this "ownership" gained centuries ago through violence or social rank, be the reason for the average person of today having pay 50% of their wages in tribute to the descendant of that original conqueror/noble ?

Seems obvious to me: The only reason those people are even "rich" is because we've collectively decided not to eat them.

There are more of us than them. Property rights are agreed and enforced by society.

1. Rule of law / a set of laws that are enforced equally upon all citizens regardless of wealth or social status.

2. Elimination of usury applied to the money supply of the country in question. That is, issuing money without having a central bank charge interest on the issuance.

I am sure there are more.

Georgist/YIMBYist synthesis with regard to Land Policy + Norwegian natural resource policy (and extending it to all artificial and natural monopolies)

https://www.gameofrent.com

https://progressandpoverty.substack.com/p/norways-sovereign-...

https://slimemoldtimemold.com/2022/05/17/norway-the-once-and...

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