Thursday, May 29, 2014

Peter Schiff — Piketty's Envy Problem

Somehow in his decades of research, Piketty overlooks the fact that the industrial revolution reduced the consequences of inequality. Peasants, who had been locked into subsistence farming for centuries, found themselves with stunningly improved economic prospects in just a few generations. So, whereas feudal society was divided into a few people who were stunningly rich and the masses who were miserably poor, capitalism created the middle class for the first time in history and allowed for the possibility of real economic mobility. As a by-product, some of the more successful entrepreneurs generated the largest fortunes ever measured. But for Piketty it's only the extremes that matter. That's because he, and his adherents, are more driven by envy than by a desire for success. But in the real world, where envy is inedible, living standards are the only things that matter.
Euro Pacific Capital
Piketty's Envy Problem
Peter Schiff


Dan Kervick said...

Of course, Piketty never argues that feudalism was superior to capitalism.

Matt Franko said...

and living standards are not unequal?

Greg said...

I think Schiff is wrong about the industrial revolution being the driver of a middle class. Those subsistence farmers didn't become middle class consumers, they became guys who had no option but to work 90 hour work weeks....... for someone else, not themselves. The majority of them struggled to put food on the table and a roof over their heads. They had ZERO bargaining power and if they tried to buck the system they had no one to listen to their grievances.

It was actually govt policies which created a middle class by allowing workers to unionize and preventing "job creators" from using force to stop them AND by increasing jobs like teachers, cops and health care workers in the public sector.

Military expansion played a role as well as GIs were treated pretty well. The military was a leader in integration policies and brought plenty of minority families out of poverty.

Tom Hickey said...

There was no what we now call "middle class" before WWII. There were chiefly workers, farmers, and a few wealthy and fewer very wealthy families. The so-called middle class before WWII lived very modestly in comparison with what "middle class" means now. Moreover, there were relatively few "poor" other than in city ghettos, miners in Appalachia, sharecrop farmers in the South, and rural "hillbillies."

Context is very different over several generations, and comparing data without reference to context is misleading.

James said...

One of the main reasons for the creation of the middle class in the US, was the GI bill.

The reality of the situation won't alter the likes of Schiff. They're living in a world of make believe, they want something to be true, so they've decided to pretend it is.