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Thursday, June 19, 2014
Dan Kervick — A Derivation of Piketty’s Second Fundamental Law of Capitalism
Several people have asked me for a more mathematically precise formulation of Thomas Piketty’s Second Fundamental Law of Capitalism, as well as a more careful statement of its proof and of the boundary conditions over which the proof applies, with some attention to the unusual and exceptional cases. I have written up some notes that are an attempt to comply with those requests.
"But an increasing deficit is compatible with rising tax revenues, diminishing tax revenues, or no changes in tax revenues: it all depends on what is happening on the spending side, and what specific purposes the public wishes to carry out with its fiscal stance. Suppose the annual US deficit were increased to $2 trillion. The US could run a $2 trillion annual deficit with either $4 trillion in spending and $2 trillion in tax revenues, or with $8 trillion in spending and $6 trillion in taxes.In the second case, the country would be establishing a much larger role for government in the overall size of the economy, and the fiscal system would potentially play a much larger role than it does currently in determining the distribution of wealth and income, not just their aggregate totals."
Beheading everyone with more than $100,000 in net worth would effectively reduce wealth inequality. And there would actually be a true function: Death would be a function of the beheading.
Dan makes a good point here in this other blog:
ReplyDelete"But an increasing deficit is compatible with rising tax revenues, diminishing tax revenues, or no changes in tax revenues: it all depends on what is happening on the spending side, and what specific purposes the public wishes to carry out with its fiscal stance. Suppose the annual US deficit were increased to $2 trillion. The US could run a $2 trillion annual deficit with either $4 trillion in spending and $2 trillion in tax revenues, or with $8 trillion in spending and $6 trillion in taxes.In the second case, the country would be establishing a much larger role for government in the overall size of the economy, and the fiscal system would potentially play a much larger role than it does currently in determining the distribution of wealth and income, not just their aggregate totals."
http://ruggedegalitarianism.wordpress.com/2014/06/13/mmters-shouldnt-succumb-to-piketty-panic/
Good point Dan... rsp
Beheading everyone with more than $100,000 in net worth would effectively reduce wealth inequality. And there would actually be a true function: Death would be a function of the beheading.
ReplyDelete