I find it somewhat depressing that an informed economics blogger like Yves Smith could be in this case so deeply uninformed about Piketty’s fundamental conceptual framework, to the extent that she thinks Piketty must be some kind of bungling duffer who has flunked basic accounting algebra. But her claims here can easily be shown to be false. Piketty’s framework is simple, elegant and coherent, and working within that framework one can easily see how the typical values Piketty finds for r and g can be sustained indefinitely without capital overwhelming the economy and without capital income devouring all other income.Rugged Egalitarianism
Naked Piketty – with a Bonus Workbook!
Dan Kervick
I'm less interested in the high minded technical debate among economists than in how Piketty changes the world for average Americans and Europeans in practice and policy as a practical matter of politics.
ReplyDeleteThe problem I have with Piketty's model is take the logic out a step or two. He approaches economics from the orthodox point of view but has a french liberal bent. He is a neo-liberal. So his wealth tax isn't practical but is a start to the discussion, right. What is the real and likely solution if r>g? Make people invest, take their social security, put it in capital markets and let markets do their r>g magic. That is why Piketty has the neo-libs and democrats fired up and repubs are sitting there excited, grinning from ear to ear and Dems keep wondering why the Repubs aren't criticising their golden goose? Piketty delivers, Republicans are eating it up in disbelief! So yeah, elegant wonderful model.
I'll stick with MMT to uses taxes, money and spending to ensure that labor gets their share. Thanks but no thanks for the witty discussion and "moving the frame." It doesn't pass the small test that will r>g over any time series so the consequence will be a giant experiment that returns less to workers than they would have had if they had social security, a JG and progressive tax policy, and counter cyclical fical spending.
I don't think "neoliberal" would be a very accurate label for Piketty. There is little in Piketty to support the idea that market forces, left to their own devices, produce socially desirable outcomes. Piketty thinks governments have to be very aggressive about governing and redistributing wealth, and that we have to move toward new forms of democratic control over capital.
ReplyDeletePiketty uses a neoclassical general equilibrium approach but that doesn't make him a neoliberal, which is a political stance based on economic liberalism. He leans more toward being a socialist than a neoliberal politically, as I gather. He has been an adviser to the French Socialist Party.
ReplyDeleteThe Socialist Party of France is today predominantly neoliberal in outlook. The "socialist" or "social democratic" label in European political parties has become meaningless, for all practical purposes.
ReplyDeleteAlso, the very concept of the euro was born and bred inside the French Socialist Party; personalities like Mitterrand and Delors were either originators or chief implementers of the EMU. The results are there for all to see.
I agree with Ryan. Better to stick with MMT - and, if in doubt, read carefully Lance Taylor's profound critique of the model and the solutions advanced by Piketty.
I agree with that, Jose, and at the same time, I don't categorize Piketty as a neoliberal. He has devoted his career to addressing inequality and inequality is a neoliberal objective, not something to be addressed or even concerned with. Even if the peasant bring out the torches and pitchforks, the total surveillance police state can be relied on to put down unrest before it spreads.
ReplyDeletePiketty is one of the good guys in this, although I agree that his approach is not the way to go. But only his approach has gained notice so far, even though US economists have been pushing this for sometime, even famous mainstream ones like Krugman, Stiglitz, and Sachs. Piketty and colleagues that collected the data have put the issue on the front burner in the US.
Hopefully, this debate is just beginning. There is no silver bullet to fix in within the framework of the status quo.
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ReplyDeleteI'm going to stay with torches and pitchforks. I don't understand the mechanisms at play here for higher taxes. But if the wealthy come to believe they pay a high price for hoarding wealth they may agree to some measures to alleviate the unemployment and poverty and near poverty rampant these days, We need a real Tea Party.
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