PIKETTY TAKES THE WORLD BY STORM

Transcription

1 PIKETTY TAKES THE WORLD BY STORM THE CIRCULATION OF IDEAS AND POLICIES CLASS 11

2 NEOLIBERALISM AS CLASS STRUGGLE Considering both the domestic and international aspects of neoliberalism free-market economics, free trade, and the free mobility of capital neoliberalism is actually what the word says, that is, a new liberalism. From a Marxist perspective, however, the notion should be understood as the expression of the restoration of the power and income of capitalist classes. The socalled free market is an instrument in service of this objective. [ Gérard Duménil & Dominique Lévy, The Crisis of Neoliberalism, 2011 ]

3 NEOLIBERALISM AS CLASS STRUGGLE There s class warfare, all right, but it s my class, the rich class, that s making war, and we re winning. [ Warren Buffett, interview with the New York Times, ]

4 THE FACTS OF INEQUALITY SECTION 1

5 THE GINI COEFFICIENT 0,4 0,35 0,3 0,25 United States United Kingdom France Germany Sweden 0,2 0,

6 TOP 1% INCOME SHARE United States United Kingdom France Germany Sweden

7 SHARE OF INCOME GROWTH UNITED STATES Top 1% Highest Quintile Fourth Quintile Middle Quintile Second Quintile Lowest Quintile

8 SHARE OF INCOME GROWTH

9 DISTRIBUTION OF INCOME & WEALTH UNITED STATES 2013 INCOME WEALTH Top 3% 31% Bottom 90% 25% Bottom 90% 52% Top 3% 54% Next 7% 17% Next 7% 21%

10 THE PERCEPTIONS OF INEQUALITY SECTION 2

11 PERCEPTIONS OF THE SOCIAL STRUCTURE

12 REPRESENTATIONS OF SOCIAL JUSTICE WOULD YOU SAY THAT YOUR SOCIETY IS FAIR? Quite fair Very fair 10 0

13 THE CONCERN FOR INEQUALITY DO YOU FIND POVERTY AND INEQUALITY WORRYING?

14 THE CAUSES OF POVERTY WHAT ARE THE CAUSES OF POVERTY IN BRITAIN? Laziness Injustice Bad luck

15 THE IDEOLOGY OF INEQUALITY SECTION 3

16 AN EMPTY CONCEPT I could not content myself to show that particular attempts to achieve social justice would not work, but had to explain that the phrase meant nothing at all, and that to employ it was either thoughtless or fraudulent. It is not pleasant to have to argue against a superstition which is held most strongly by men and women who are often regarded as the best in our society, and against a belief that has become almost the new religion of our time (and in which many of the ministers of old religion have found their refuge), and which has become the recognized mark of the good man. But the present universality of that belief proves no more the reality of its object than did the universal belief in witches or the philosopher s stone. I believe indeed that the greatest service I can still render to my fellow men would be if it were in my power to make them ashamed of ever again using that hollow incantation. I felt it my duty at least to try and free them of that incubus which today makes fine sentiments the instruments for the destruction of all values of a free civilization. [ Hayek, The Mirage of Social Justice, 1976 ]

17 A GALVANIZING INFLUENCE Hayek s writings are the new gospel of inequality. [ Jacques Julliard, La nouvelle idole de la droite, Le Nouvel Observateur, ]

18 A GALVANIZING INFLUENCE My object is to challenge one of the central prejudices of modern British politics, the belief that it is a proper function of the State to influence the distribution of wealth for its own sake. On my side of the argument, F. A. Hayek is a formidable but solitary figure. [ Keith Joseph, Equality, 1979 ]

19 WHY BOTHER ABOUT INEQUALITY? Of the tendencies that are harmful to sound economics, the most seductive, and in my opinion the most poisonous, is to focus on questions of distribution. Of the vast increase in the well-being of hundreds of millions of people that has occurred in the 200-year course of the industrial revolution to date, virtually none of it can be attributed to the direct redistribution of resources from rich to poor. The potential for improving the lives of poor people by finding different ways of distributing current production is nothing compared to the apparently limitless potential of increasing production. [ Robert Lucas, The Industrial Revolution: Past and Future, 2003 ]

20 WHY BOTHER INDEED? The Labour Party is intensely relaxed about people getting filthy rich as long as they pay their taxes. [ Peter Mandelson, comment made to California computer executives, ]

21 SORRY, WE GOT IT WRONG! I don t think I would say that now. Why? Because globalization has not generated the rising incomes for all, the rising prosperity and living standards that we took for granted and which we assumed globalization would drive. We have learnt that markets can become volatile and unstable and have to be managed and regulated and that globalization is also generating income inequalities within countries and between countries that we simply can t and shouldn t live with. [ Peter Mandelson, statement on the BBC Radio 4 s Today program, ]

22 THE POLITICS OF INEQUALITY SECTION 4

23 WHY BOTHER TAXING THE RICH? The very high tax rates weren t raising any revenue at all. What was happening was that people were going to the accountants to find ways around it. And in so far as it had any effect on incentives, the wealthy appeared to be spending more time on the golf course. The point of policy was to make the economy more successful. If that meant that some people got richer, why not. The focus on equality and inequality is at the expense of what is good for the economy. [ Nigel Lawson, Chancellor of the Exchequer , BBC Radio 4, ]

24 TOP MARGINAL INCOME TAX RATE 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% United States United Kingdom France Germany

25 SHARE OF FEDERAL TAX REVENUE Income tax Corporate tax Payroll tax

26 EFFECT OF TAXES ON GINI COEFFICIENT 0,6 0,5 0,4 0,3 0,2 0,1 0 United States United Kingdom France Germany Sweden OECD Before tax After tax Point reduction

27 HERE COMES PIKETTY! SECTION 5

28 THE PIKETTY REVOLUTION Thomas Piketty isn t a household name, although that may change with the English-language publication of his magnificent, sweeping meditation on inequality. Yet his influence runs deep. It has become a commonplace to say that we are living in a second Gilded Age defined by the incredible rise of the one percent. But it has only become a commonplace thanks to Piketty s work. The result has been a revolution in our understanding of long-term trends in inequality. Before this revolution, most discussions of economic disparity more or less ignored the very rich. It therefore came as a revelation when Piketty and his colleagues showed that incomes of the now famous one percent, and of even narrower groups, are actually the big story in rising inequality. And this discovery came with a second revelation: talk of a second Gilded Age, which might have seemed like hyperbole, was nothing of the kind. Piketty has transformed our economic discourse; we ll never talk about wealth and inequality the same way we used to. [ Paul Krugman, Why We re in a New Gilded Age, ]

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30 RATE OF RETURN VS GROWTH RATE WORLD LEVEL 6% 5% 4% 3% 2% 1% 0% Rate of return to capital Rate of return to capital after capital losses Growth rate

31 PRODUCTION & DISTRIBUTION The laws and conditions of the production of wealth partake of the character of physical truths. There is nothing optional or arbitrary in them. It is not so with the Distribution of Wealth. That is a matter of human institution solely. The things once there, mankind, individually or collectively, can do with them as they like. The distribution of wealth, therefore, depends on the laws and customs of society. [ John Stuart Mill, The Principles of Political Economy, 1848 ]

32 THE BOOK OF THE DECADE It seems safe to say that Capital in the Twenty-First Century, the magnum opus of the French economist Thomas Piketty, will be the most important economics book of the year and maybe of the decade. [ Paul Krugman, Wealth Over Work, ]

33 CIRCULATION FIGURES LATE 2014-EARLY Worldwide English French German Chinese Japanese

34 THE HAWKING INDEX JULY Flash Boys by Michael Lewis Lean In by Sheryl Sandberg Thinking Fast and Slow by Daniel Kahneman A Brief History of Time by Stephen Hawking Capital in the Twenty-First Century by Thomas Piketty

35 PIKETTY BLOWS A FUSE It was a stupid statistic. I think the people who have done that, they should read more books. I think it s useful to read books, rather than doing this stupid statistic this is really ridiculous. All that says is the introduction of my book is very good so people like it a lot and so they scribbled a lot on the introduction, but it doesn t say anything about the fact that people have read it. [ Thomas Piketty, We Need Permanent Revolution, ]

36 PIKETTY IS A ROCK STAR In the spring of 2014, CTFC topped the Amazon bestseller list for two weeks and the NYT nonfiction bestseller list for three weeks As of fall 2014, CTFC had already been translated into 32 languages In November 2014, CTFC received the Financial Times and McKinsey Business Book of the Year Award In December 2014, The Guardian named Piketty the most influential thinker of the year

37 THANKS, BUT NO THANKS I refuse this nomination because I do not think it is the government's role to decide who is honorable. They would do better to concentrate on reviving growth in France and Europe. [ Piketty, AFP, ]

38 IDEAS AND CIRCUMSTANCES Like Friedman, Piketty is a man for the times. For 1970s anxieties about inflation substitute today s concerns about the emergence of the plutocratic rich and their impact on economy and society. The current level of rising wealth inequality, set to grow still further, now imperils the very future of capitalism. He has proved it. [ Will Hutton, Capitalism Simply Isn t Working and Here Are the Reasons Why, ]

39 ANOTHER SPREADSHEET ERROR?

40 NOT EVERYBODY LOVES PIKETTY Cette nouvelle religion surnommée pikettysme n est rien moins qu une imposture. Loin de servir la vérité scientifique, Le Capital au XXI e siècle s emploie au contraire à la camoufler derrière des tonnes de chiffres, à la tordre dans tous les sens, à la manipuler à son gré.

41 TOWARD A PARADIGM SHIFT SECTION 6

42 POLITICIANS GET IT I believe this is the defining challenge of our time: making sure our economy works for every working American. It s why I ran for President. It was at the center of last year s campaign. It drives everything I do in this office. [ Barack Obama, Remarks on Economic Mobility, ]

43 TECHNOCRATS GET IT The extent of and continuing increase in inequality in the United States greatly concern me. The past several decades have seen the most sustained rise in inequality since the 19th century. I think it is appropriate to ask whether this trend is compatible with values rooted in our nation s history, among them the high value Americans have traditionally placed on equality of opportunity. [ Janet Yellen, chairwoman of the Federal Reserve, Perspectives on Inequality and Opportunity, ]

44 EVEN BUSINESSMEN GET IT Inequality is one of the key challenges of our time. Ranking second in last year s Outlook, it was identified as the most significant trend of 2015 by our Network s experts. This affects all countries around the world. In developed and developing countries alike, the poorest half of the population often controls less than 10% of its wealth. This is a universal challenge that the whole world must address.

45 SOLUTIONS TO INCOME INEQUALITY

46 A NEW HOPE? Perhaps we re seeing one of those great generational shifts in the nature of policies adopted by governments and central banks that determine our prosperity. [ Robert Peston, BBC News economics editor, The Price of Inequality, BBC Radio 4, ]

47 GOING FURTHER CHAPTER 12 Global Inequality of Wealth in the Twenty-First Century CHAPTER 15 A Global Tax on Capital