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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]

#311

Post by ebalit »

eru wrote: post #310
ebalit wrote: post #78

Earlier quoted context omitted.

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.

Yes, that confusion is a decent enough explanation. The important thing I want to highlight, is that as factors of production go, increasing returns to land have different policy implications than increasing return to capital: A general wealth tax might be required if capital was actually the problem; with all the economic inefficiency that implies. I don't know for sure. But increasing returns to land have a simple…

I'm sold to Henry George's land value tax idea, if we were to create a nation. But we aren't.

In our current situation, I would worry that taxing only the wealth "stored" in land ownership would create a massive economical crisis as capital tries to escape this new tax.

A broader wealth tax base, with a slightly higher rate for land, is a more prudent approach.

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

#312

Post by ebalit »

aminok wrote: post #110
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.

Picketty's theory is that there's something inherent to market economies that leads to capital's share of income increasing. The evidence suggests it's due to peculiarities related to how advanced economies treat property/land, that are orthogonal to their status as market economies, that are responsible for capital's growing share of income.

Piketty's theory is not that capital's share of income is increasing. I read this many time and I think it is a misconception of his work.

His theory is that wealth grows faster than the economy, and that it creates wealth inequality. He has shown that it is not something new, that it is something stable throughout history.

I'm not even sure that his theory is limited to market economies. At least, it's not limited to modern market economies.

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

#313

Post by broke_wagon »

aminok wrote: post #299
broke_wagon wrote: post #287

Earlier quoted context omitted.

It sounds like you are confusing communism with central ownership or state ownership. Communism is only concerned with the ability of workers to have meaningful control of work activity and output.

No I am not confusing anything. Marx laid out what mainstream Communism is, and that includes expropriating property from people, and denying the people the right to engage in voluntary economic interactions. You may be confused as to what 'voluntary economic interactions' means, so I'll explain: This would be any kind trade enter into by two consenting adults, like for example, doing a number of hours of work in exc…

You seem to have a very particular idea of one kind of communism, and you seem happy to interpose it into my opinions.

Having said nothing about how or even if communism should be brought about, I certainly acknowledge that it seeks to bar certain apparently voluntary economic interactions on the grounds that they are not as voluntary as they first seem.

Take the rest of your strawman with you, I have no use for it.

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

#314

Post by aminok »

broke_wagon wrote: post #313
aminok wrote: post #299

Earlier quoted context omitted.

No I am not confusing anything. Marx laid out what mainstream Communism is, and that includes expropriating property from people, and denying the people the right to engage in voluntary economic interactions. You may be confused as to what 'voluntary economic interactions' means, so I'll explain: This would be any kind trade enter into by two consenting adults, like for example, doing a number of hours of work in exc…

You seem to have a very particular idea of one kind of communism, and you seem happy to interpose it into my opinions. Having said nothing about how or even if communism should be brought about, I certainly acknowledge that it seeks to bar certain apparently voluntary economic interactions on the grounds that they are not as voluntary as they first seem. Take the rest of your strawman with you, I have no use for it.

>I certainly acknowledge that it seeks to bar certain apparently voluntary economic interactions on the grounds that they are not as voluntary as they first seem.

It would bar transactions that any court of law would find to be consensual. It's not a just system.

You're right I can't criticize your views that much because you do not actually outline what they are beyond vaguely saying they're communism but not saying specifically what that means in terms of what happens to the property we earn in private trade, and what private trades we're allowed to engage in.

That suggests to me that you are hiding what you truly believe in because you know it is not palatable while still promoting the 'communism' brand, knowing full well what most interpret that as.

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

#315

Post by aminok »

drieddust wrote: post #261
aminok wrote: post #195

Earlier quoted context omitted.

A tax break is not government intervention.. And no, it hasn't been all 'right-wing' intervention, though I'd certainly agree that there has been a lot of that. There's been a ton of new 'left-wing' intervention in the form of growing welfare programs and authoritarian prohibitions on free association a la affirmative action, anti-private-discrimination laws, etc.

> A tax break is not government intervention.. It is, a big corporation should not be served a bread buttered on both sides. Tax break is a form of risk mitigation. Corporations are supposed to be awarded tax break to allow them to take risks and move us forward. Does it really happen?[1]. I am not sure why a big group whose over all interest is to preserve status quo should be allowed tax break and keep on earning b…

Nothing you wrote supports the ridiculous notion that expropriating less of a corporation's income is a form of government intervention.

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

#316

Post by aminok »

broke_wagon wrote: post #286
loki49152 wrote: post #140

Earlier quoted context omitted.

Communism is a very specific ideology with a well-known, well-documented content and intellectual history. It isn't "just a process" for anything. Communism is evil because its ideology has no relationship with reality and will inevitably be a practical disaster anywhere it's implemented to the degree that it's implemented as a result. There's no escaping it any more than you can escape the laws of physics.

Of course it's just a process. Capitalism is a process which centralizes surplus and power, i.e., increases inequality, and communism is a process which decentralizes surplus and power, i.e. decreases inequality. Calling communism unrealistic and disastrous is again just being diminutive. Communists want for people who do productive work to have an equal say in how work is done and what happens to the product. Not co…

Capitalism is a process that respects individual rights and in particular, contract law. It is a process that is responsible for more poverty reduction than any other in history, and for which there is a trove of evidence indicating that it boosts economic growth rates.

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

#317

Post by aminok »

quadrangle wrote: post #296
WalterBright wrote: post #291

Earlier quoted context omitted.

> nonsense In simple terms, capitalist farmers produce a surplus, kibbutz farmers produce a deficit. Kibbutzen operate within a market economy and have all the resources of it that are available to the capitalist farmer - they still can't make a go of it. > not a principle of communism. Collective ownership of the means of production means confiscating it. > Forced labor When the collective decides that certain work…

Anyone who views any of these ideas with a rigid dogma is misguided. The broad scope of varied ideas that fall under the concepts of communism do not exclude the concept of markets. Markets are extremely valuable. If you wanted to say that there are major fundamental problems with having no markets, I'd agree completely. Communism is not a set of ideas necessarily anti-market. https://en.wikipedia.org/wiki/Market_soc…

To the best of my understanding, market socialism is just worker coops operating within a traditional market economy. That would mean it's not an actual political ideology.

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

#318

Post by dllthomas »

WalterBright wrote: post #124
quadrangle wrote: post #105

Earlier quoted context omitted.

There have been nowhere near enough actual trials of communism to conclude anything fully. The core examples were all poorer countries with various problems, corruption… To reject communism as a concept over the atrocities of Stalin et al is as reasonable as rejecting capitalism because the U.S. was built on slavery and the genocide of first peoples. The atrocities were real, and they did connect to economics, but to…

Review "The Black Book of Communism" for a catalog of the death and misery from communist countries, over and over. Voluntary communes and Kibbutzen have failed as well - none have been capable of operating without subsidy.

Not at all to weigh in on the general topic, but the plural of kibbutz (in Hebrew or English) is kibbutzim.

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

#319

Post by om2 »

tome wrote: post #304
om2 wrote: post #188

Earlier quoted context omitted.

It doesn't really make sense to take "percentage increase" as dimensionless, because it leads you to compare growth rate of incomparable things. One of the most basic rules of economics is that you can't compare stocks and flows. Why would it be meaningful to compare their % increase per year? Let's say that for construction company A, the total number of houses it has built increases by 10%. (This is comparable to a…

> Or to put it more generally, a stock growing at fixed rate grows linearly, but a flow that grows linearly implies a stock growing at a quadratic rate. O(N^2) will always outpace O(N). I see what you're getting at, but surely you've got the rates wrong. A stock growing at a fixed rate grows exponentially , and O(exp N) will always outpace O(N^2).

You're right that I made a mistake, but it's the labor income case that is exponential, not the capital income case. Earning Wr every year is constant income and linear growth in wealth (where W is your starting wealth). Earning I(1+g)^n every year is exponential growth in both income and wealth.

Note that r is the return on capital, for an asset worth W, you earn W*r income. It says nothing about whether W increases or decreases. (In fact, if the value of W increases but the income generated is the same, then r goes down.) That would be a capital gain (or capital loss). An asset can produce a return on capital while losing value. If you assume W doesn't go down in value, and furthermore, all the capital income is reinvested, but no labor income is reinvested, then you do indeed get exponential growth of wealth for the capital income case, and no growth of wealth for the labor income case. But then all the work is being done by assumptions about savings rate and depreciation, and none by the comparison between r and g.

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

#320

Post by om2 »

Mikeb85 wrote: post #278
om2 wrote: post #189

Earlier quoted context omitted.

r isn't the growth rate of capital's share of income though. r represent the return on capital (which is proportional to capital's share of income), not the growth rate of the return on capital, or the growth rate of capital's (share of) income. On the other hand, g isn't the return on labor, or labor's share of income. It's (approximately) the growth rate of the return on labor. Would you rather have $100 and then g…

In Piketty's model, r is return on capital. So that means it's the return on things like equities (and btw, interest is compounding on investments, don't know why you represented otherwise), real estate (Piketty is not overly find of the role of rentiers/landlords in the economy), machinery and so on. So the money accrued by the owners of wealth and machinery that is, essentially passive income, or income generated b…

I haven't confused r with g. I think you may not have thought through what these quantities represent. r is the return on capital. An asset worth A returns A*r per year. This says nothing about wether A increases or decreases. You can use your capital income to buy more capital assets. But you can also use labor income to buy more capital assets. Basically the argument only works if you assume all capital income is saved, but no labor income is saved. But then the savings rate is doing all the work.
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