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Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

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Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#71

Post by mahyarm »

trapperkeeper79 wrote: post #11

Wonderful talk. One thing he called for was a wealth tax, which is something that makes complete sense but is going to be very unpopular. On the otherhand, he also calls for progressive income taxes (something that is reported by the media and an easier pill to swallow) - in my country, Canada, progressive income taxes are not the answer IMHO. We didn't have as much inequality for education (i.e. lots of decent Unive…

Unaffordable housing markets are created by 3 things usually:

1. Strong NIMBY anti-development policies.

2. Low property taxes.

3. Foreign money using housing as a bank account.

You see it in vancouver, london, SF, NYC and you'll probably find those ingredients in other places too.

To counteract it you need:

Federal legislation that prevents any city or province from restricting dense multi-family development of up to 20 stories. By right development, minimal parking requirements and so on. It's in the interest of the federal government to make housing affordable, but not so much in the interest of local governments. Something like Japan's federal inclusive zoning laws are ideal.

Property tax is a wealth tax, and it happens to be pretty low in places like Vancouver or London. I would increase it to something around %1 in stages. People are more accepting of a property tax than a straight wealth tax because it already exists and doesn't directly penalize saving behavior.

Also adding high taxes on unoccupied units in dense areas. And an other housing tax on non-residents of a city to make using housing as a bank account a really bad idea.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#72

Post by smallnamespace »

metaphorm wrote: post #68
smallnamespace wrote: post #30

Earlier quoted context omitted.

It wasn't very long ago. Up until 1968, dollars were convertible into gold and pegged at $35 / oz [1], meaning the government intervened to keep it at that price. From 1968-1971, the US still honored that rate with other countries, but stopped intervening in the private gold market [2]. Then the US left the gold standard, and everyone else followed suit. [1] https://en.wikipedia.org/wiki/History_of_the_United_States_…

well, that's not at at all what I asked for an example of. I know the history of the gold standard and when/how/why the dollar was taken off gold backing. I would like to know of a historical example of when a significant (meaning large quantity, high economic impact) exchange of dollar denominated treasury notes were redeemed for their face value in gold metal. did that ever even happen? I'm unaware of any instances…

How is that any different from redeeming notes in dollars, then buying gold for the pegged price of $35/oz.?

Since the markets were open and liquid, I'm sure people converted between gold and dollars all the time. It just wasn't anything to make note of.

What did cause Nixon to take the US out of Bretton Woods is when a bunch of our trading partners threatened to redeem dollars for gold all at once, and we didn't have enough gold to cover it.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#73

Post by dibujante »

VodkaHaze wrote: post #40
tmnvix wrote: post #23

Earlier quoted context omitted.

Exactly. We should be taxing wealth and not income (or roughly speaking, unearned instead of earned income). Taxing productive activity is literally counter-productive. This will only become a more pressing issue once automation (esp. of the transport industry) gets into full-swing. Eventually we won't have a choice in the matter. There are a whole host of current issues that are culminating in wealth and income dist…

> We should be taxing wealth and not income (or roughly speaking, unearned instead of earned income). You'll see most economists advocating a consumption tax, instead. > quantitive easing pumping up asset prices while doing nothing for the real economy Both the "pumping up asset prices" and "while doing nothing for the real economy" is extremely disputable. It's kind of pompous of you to think you know better than th…

  You'll see most economists advocating a consumption tax, instead.
I'm not sure what the difference is between a consumption tax and a sales tax.

  The corporate tax should be 0%. No, I'm not kidding; hear me out.
  Corporations aren't people; they don't ever actually pay taxes. People pay taxes. Yes, I know corporations are legal entities, but they're owned and managed by people, somewhere down the line. Those are the people the corporate tax is intended to target.
  Presumably, the "goal" here is to get the corporations with scale economies, negotiation power, etc. to be taxed and use this to redistribute economic gains.
  But what happens is that instead the burden of these taxes fall onto the shoulders of non-management workers in the firms and the people who buy what the firm produces. Because the incidence of a tax is indirectly distributed by a mechanism which depends itself on the negotiation power of the actors in the system.
Pretty much. I don't remember where I read it but I did read a study of corporate tax in the USA over the past few decades that found that increases in corporate tax were almost entirely born by non-management employees and consumers.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#74

Post by mahyarm »

eldavido wrote: post #15
trapperkeeper79 wrote: post #11

Wonderful talk. One thing he called for was a wealth tax, which is something that makes complete sense but is going to be very unpopular. On the otherhand, he also calls for progressive income taxes (something that is reported by the media and an easier pill to swallow) - in my country, Canada, progressive income taxes are not the answer IMHO. We didn't have as much inequality for education (i.e. lots of decent Unive…

I'm tempted to blame ultra-loose monetary policy, but I'm not so sure. I live in the Bay Area where house prices are also out of control, but I'm not sure why we focus on prices (rather than monthly debt payments) since what, 90% of the market is payment buyers? In any case, I do believe the current interest rate environment has distributional consequences that haven't been well-studied. It seems the biggest benefici…

Bay area housing prices are created by prop 13 incentivizing people not to sell houses (reducing supply) and creating low property taxes (reducing cost), very strong NIMBY blocking of development (reducing supply), some foreign money investing in the area (increasing demand) and a tech economic boom (increasing demand).

Mortgage rates do not cause it as much, a percentage point increase in a typical bay area mortgage will only add ~$300/mo to a 560k house mortgage. The mortgage interest deduction reduces it by your tax rate.

SF is an area where people rather have an economic recession vs growth because the system can't handle growth.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#75

Post by om2 »

VodkaHaze wrote: post #2

In the interest of giving the fuller discussion: Picketty's book has been out for a while now. It is good economics. It deserves rightful praise, and scrutiny. Acemoglu and Robinson's answer[1] is also good economics. Digestible podcast form here [2]. It purports that Picketty's "r>g" model is flawed. It also deserves a reading. All of this is part of a larger discussion, which C21 started. r > g doesn't seem to expl…

One thing that always puzzles me about r > g is that it's comparing a first derivative to a second derivative. How can this be meaningful?

To explain further, r is return on investment, which approximately means rate of growth of wealth of capital. That is, it is a the first derivative of a stock, or equivalently a flow. g is the rate of growth of income, where income itself is a flow. So it's the second derivative of a stock. How does it even make sense to compare these two quantities when they don't have the same units?

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#76

Post by jernfrost »

I wish more people could have Thomas Piketty's balanced view on capitalism. Too often it is treated as some sort of game where you have to pick sides whether you are for or against capitalism.

Especially in America there seems to be a kneejerk reaction to any calls for regulations or moderations of the effects of the free market. Usually it is dismissed without further discussion with "look what happened in the east block countries!"

But I think Thomas Piketty has a very good point in his book that if you in fact favor capitalism, you ought to be open to regulation of it. The alternative is what we have seen again and again in history, inequality gets so bad that we get uprisings and revolutions. Inequality is breeding ground for radical ideas like communism. Otto von Bismarck understood that and gave Germany the beginnings for a welfare system. Not because he really cared about workers but because he understood the dangers of inequality with respect to radicalization of the poor.

Today we can see the same thing starting to play out in America. The US have now been on a path towards ever higher inequality for many years and we can see it reaching a breaking point. Politics is getting ever more radical. Donald Trump and Bernie Sanders would never had gotten the support they got without the economic fundamentals having shifted so much.

We already know what high inequality leads to in modern times, because we have seen it play out in South America again and again. They oscillate between one political extremist or populist after another.

I think if the US doesn't actually seriously try to reduce inequality, the US risks ending up with its own Hugo Chavez character, or alternatively a right wing authoritarian.

And if inequality doesn't cause revolutions, there seems to be a good case for it causing asset bubbles. We saw this in 1929 which market the end of a dramatic wealth inequality increase, just as 2008. I think it will happen again because the fundamental problems have not been solved.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#77

Post by tomcam »

jernfrost wrote: post #76

I wish more people could have Thomas Piketty's balanced view on capitalism. Too often it is treated as some sort of game where you have to pick sides whether you are for or against capitalism. Especially in America there seems to be a kneejerk reaction to any calls for regulations or moderations of the effects of the free market. Usually it is dismissed without further discussion with "look what happened in the east…

Where in the USA is the market not regulated?

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#78

Post by ebalit »

eru wrote: post #59
ebalit wrote: post #51

Earlier quoted context omitted.

Why would it contradict Piketty's theory? Housing is capital. This post seems to respond to the theory that wealth inequality is caused by the rise of automation. That has nothing to do with Piketty's theory.

Capital and land are different: you can make more capital to compete against existing capital, you can't really make more land.

Capital is used as a synonym of wealth. It's a book about wealth inequality.

The book was originally written in French, and land is considered as "capital foncier". Maybe this meaning got lost in translation, but I think "capital" also has the "wealth" meaning in English.

Nevertheless, the point I was making still holds. The Medium post isn't a refutation of Piketty's theory.

Re: Thomas Piketty’s Capital in the 21st Century, in 20 minutes (2014) [video]

#79

Post by ebalit »

tomcam wrote: post #77
jernfrost wrote: post #76

I wish more people could have Thomas Piketty's balanced view on capitalism. Too often it is treated as some sort of game where you have to pick sides whether you are for or against capitalism. Especially in America there seems to be a kneejerk reaction to any calls for regulations or moderations of the effects of the free market. Usually it is dismissed without further discussion with "look what happened in the east…

Where in the USA is the market not regulated?

I don't think GP meant that the market should have rules but that capitalism should be regulated (as an organism is) to maintain inequality at the sweet spot where it is efficient, instead of letting it rise and getting fever.
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