Comment by enraged_camel | Hacker News Reader

Comment by enraged_camel | Hacker News Reader

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The Giles quote provided by Krugman is illustrative of his agenda -- or his delusion:

>>The exact level of European inequality in the last fifty years is impossible to determine, as it depends on the sources one uses. However, whichever level one picks, the lines in red in the graph show that – unlike what Prof. Piketty claims – wealth concentration among the richest people has been pretty stable for 50 years in both Europe and the US.

>>There is no obvious upward trend. The conclusions of Capital in the 21st century do not appear to be backed by the book’s own sources.

Of course the upper class wants you to believe that wealth inequality has not been increasing. Of course they want you to believe that things are fine and dandy. They want you to believe these things because they don't want their wealth taken away, either via taxes or via revolutions. And Giles is simply their mouthpiece.

Like Krugman, I'm looking forward to Piketty's defense. But I doubt the errors are anywhere enough to overturn his conclusions.

Piketty definitely needs to respond thoroughly to the errors that Giles found, and Piketty's response so far is too flippant and superficial. This is serious stuff and it deserves a serious response.

That said, those who don't want to talk about inequality are prematurely jettisoning Piketty's conclusions.

A very simple way to measure inequality is the ratio of the wealth of the top quintile to the middle quintile. It's easy to see how this ratio escalated over the last 25 years.

http://houseofdebt.org/2014/05/24/piketty-and-u-s-wealth-ine...

Spreadsheet errors notwithstanding, the inequality story is not going away.

The trouble is that the inequality story is a complete mischaracterization of the problem and it's very misleading about what the prospective solutions are. It leads people to believe that the issue is with John McCain owning houses across multiple states, when the actual problem is with the Koch Brothers owning Senators across multiple states.

And what's the solution? Everybody says "tax the rich." The problem is that income taxes doesn't cause their wealth to decrease, they at best cause it to increase less rapidly. In practice they do nothing (or worse than nothing) because the biggest companies don't pay them anyway, and it creates a large competitive disadvantage for companies not large enough to engage in international tax avoidance, which makes the problem even worse.

Meanwhile any money you manage to raise you can't spend until you first fight against a bunch of "domestic companies creating American jobs" who want to use it to fund Deep Water Horizon 2.0 or studies denying climate change or supply attack helicopters to the North Dakota state police, because aforementioned billionaires still have a thousand times more money than you with which to lobby Congress.

The only way to fix any of it is to shut down K Street. Obviously that's a chicken and egg problem, because K Street is in a good position to protect itself, but if that's not your end game then you might as well stay home.

Public financing of campaigns would shut down K Street's electoral (campaigning) influence. Lobbyists could then resume their focus on policy.

The only solution is to take power out of the hands of politicians.

Get rid of K Street and something worse will take its place.

Get rid of Congresses ability to regulate every detail of the economy and K Street will have a lot less to lobby for.

There is certainly something to be said for placing clear limits on what Congress can do, but it's extraordinarily difficult to set out what they should be able to do ex ante and get it right. For example, it makes reasonable sense that the federal government should be in charge of the national defense, but then Washington is colonized by the defense industry which allocates itself a budget the size of Sweden's GDP. On the other hand, state governments have repeatedly demonstrated their ability to be captured by major industries within the state (e.g. coal in West Virginia, oil in Texas) and if it wasn't for the EPA those states would be [even more] uninhabitable, but we only have the EPA as a result of reading the commerce clause quite broadly. Making environmental regulations isn't specifically enumerated as a power of the federal government.

I sometimes wonder if the problem isn't one of having too much accountability. If terms were twice as long then politicians could spend half as much time campaigning and wouldn't have to take as much money from private interests to stay in office. If federal senators went back to being appointed by the state legislatures there would be less voting but there would also be less unwarranted federal interference in state affairs. And so on.

It's interesting that you bring up environmental issues. Those are especially tricky, since they deal with the commons: our air and water, which are typically not privately owned and thus are legally forbidden from being handled by the free market.

And the military? Well, sure there are issues there. We can all agree on that.

Now, the military and environmental regulation are inextricably linked to the economy, no doubt about that. And their impact on the economy can be large, no doubt about that either. But there is so much which the government gets involved with - and where there is SO much money to be made via lobbying and influence peddling - which the government really doesn't need to be involved in.

I guess I'm saying that if the EPA and military corruption were the only issues we had to deal with, we'd be in a much better space than we are now.

But those are just examples. You would have the same issue with state-level regulatory capture with finance in New York, or internet and other utility providers capturing the states they provide service in, etc. And then there's antitrust and copyright and other such things that essentially have to be done at the federal level because they have national scope.

There are certainly things currently done by the feds that could be reasonably handed over to the states. Social security comes to mind as a big one. But social spending is hardly the area where moving that out of Washington would make the largest dent in K Street.

The point of moving regulation to the states is to foment competition amongst said states - this should exert downward pressure on corruption, but how much we don't really know. Certainly we currently have some states which are more corrupt than others. Which would certainly be an improvement on the status quo.

Copyright is certainly a popular issue here on HN, and I'm sure K Street makes a lot of money on it, but again it's like the EPA - something which the government has to by definition regulate in some way.

In fact, moving Social Security and Obamacare subsidies to the states would probably put a larger dent in K Street than all of the other issues you've mentioned combined (military, EPA, copyright, antitrust). You're talking about trillions in handouts, issues which impact every single citizen, massive bureaucracies fighting for power.

The top quintile is a useless bucket. It includes the top 1% and top 0.01%, which are of a completely different character from the rest of the top quintile. Those who control vast wealth hide in the watered down average -- Bill Gates does not belong in the same bucket as a young dentist.

Deleted comment

It's also a structural argument. I'm trying to think how to rephrase.

Maybe the first question to ask is: are there enough wealthy powerful people who look after their own selfish interests in the political sphere, to tilt the playing field in their favor, or are they offset (or more than offset) by other folks trying to tilt the playing field in favor of the 99%?

It's also possible to argue about whether the field can be tilted (or which fields are worth tilting).

(Edit) parent was calling out enraged_camel's comment as as-hominem which I can see what it was saying but it's sort of the crux of the discussion so...

> And Giles is simply their mouthpiece.

You may want to insert an "unwitting" in front of "mouthpiece" (assuming that's what you meant); otherwise, you're making a pretty serious claim, and need to back it up.

The rule of thumb I use in situations like this is an aphorism I heard a while back (by some mathematician) which basically said that the best description of any system is its results.

I find it extremely helpful in these sorts of situations to judge the system, not the particular actors within it, or the mixture of rationality, conspiracy, stupidity, or dumb luck which is employed to create it.

It seems he is making a far bigger leap in discounting Picketty's thesis, with the information we have at hand, than Picketty was in creating it. So it doesn't matter whether Giles is unwitting or not (except perhaps from his own point of view) he is acting as a mouthpiece.

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