Final notes on Piketty's Capital | 12 comments (12 topical, editorial, 0 hidden)

Re: Final notes on Piketty's Capital (none / 1)

National Review has an interview talk between Nassim Taleb and Mark Spitznagel, largely on Piketty's book. For me, it's a messy stuff, with many up things down, etc. Here are a couple of puzzling bits:

Taleb: ... one can argue that the system should ensure downward mobility, something much more important than upward one. The statist French system has no downward mobility for the elite. In natural settings, the rich are more fragile than the middle class and we need the system to maintain it ...
Spitznagel: ... what's hidden beneath all the aggregate income-inequality data is much cross-sectional downward mobility, in that most people in the right tail of income spend very little time there. The transience of success is assured by natural entrepreneurial capitalism, and is precisely what works about it: unseating the top, driving out the lucky and unworthy. Without this dynamic, capitalism doesn't work. It isn't even capitalism, but rather oligarchic central planning. Yet modern government chips away at this dynamic in so many ways, most significantly by providing floors and safety nets to crony bankers and other financial punters. What irony that the same people who today loudly endorse a global wealth tax to rein in inequality were also the very ones saying guys like us were nuts for opposing the bailouts back in 2008!

What a BS the last statement! The 2008 administration and analysts must had been so long ago.

Piketty data shows that the post-WWII Keynesian decades were most transient for the top - while the natural r>g tendency bites towards greater inequality.

... we pursue a small present good which will be followed by a great evil to come, rather than a great good to come at the risk of a small present evil. The latter is what I call roundaboutness, which is central to strategic decision making, especially investing. It is about counter-intuitively heading right in order to better go left, or taking small losses now -- and willingly looking like an idiot -- to build a strategic advantage for later.
[...] We have roundaboutness to thank for civilization itself ...

The most roundabout times were the same post-WWII decades. Now even airlines dream about minimum roundaboutness.

This is then related to Taleb's "skin in the game" idea. It seems to me, currently capital owners and top CEOs are entitled to maximum anti-roundabout profits with minimum exposure of their skin to the game. You need a government for that indeed - but not "people's government for the people".

Then they two address Piketty directly - but that is not worth my time.

by das monde on Mon Jun 2nd, 2014 at 08:27:43 AM EST

Re: Final notes on Piketty's Capital (none / 0)

Oh my, that is quite something. BS reigns supreme indeed.

I would just say that I'm not sure r>g is "natural". I guess it's mostly enforced thanks to the power of money -which goes some way towards explaining why it was never less true than during the after WW2 period.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Jun 2nd, 2014 at 08:42:56 AM EST
[ Parent ]

Re: Final notes on Piketty's Capital (none / 0)

Absent public awareness and policy consensus, the "r>g" disparity is pretty natural. The discrepancy between mathematical "r" and physical "g" has to be resolved institutionally one way or other - and the easier way is the one we have now.

by das monde on Mon Jun 2nd, 2014 at 09:09:58 AM EST
[ Parent ]

Re: Final notes on Piketty's Capital (none / 1)

"Absent public awareness and policy consensus"

Or strong unions, one might add. But in general you are right, of course -however, public awareness is clearly what Piketty was trying to get.
I was just pointing it out because I feel that we should not let the meme that this is just in the nature of things stay unchallenged. Also, as I mentioned, I believe that it is the difference between r and productivity growth that matters, not with total growth (although Piketty does compare to total growth), when discussing inequalities.

As an aside, as Krugman mentioned today, the demographic transition, towards a drop in the working-age population, could have a strong impact on the discrepancy between r and g. So it may have been somewhat natural because we were always in growing times, and now the reverse become natural because there may be an unreversible decline in numbers.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Jun 2nd, 2014 at 10:10:14 AM EST
[ Parent ]

Re: Final notes on Piketty's Capital (none / 1)

Just as life on this planet is the wonder of swimming upstream the global thermodynamic flow, thriving economics is the art of moving against decay, static equilibria. Under some conditions this is spontaneously easy, but most of the time, it is challenging every "natural" hurdle.

by das monde on Mon Jun 2nd, 2014 at 10:49:10 AM EST
[ Parent ]

Re: Final notes on Piketty's Capital (none / 0)

Well, "r>g" is obviously subject to the bargaining power of labour vs capital, and to tax and general economic environment. The only reason to suppose that it's "natural" is to regard the capture of political power by capital as "natural". Immanent Will? Manifest Destiny? Invisible Hand? My arse.

_{It is rightly acknowledged that people of faith have no monopoly of virtue
- Queen Elizabeth II}

by eurogreen on Mon Jun 2nd, 2014 at 10:24:47 AM EST
[ Parent ]

Re: Final notes on Piketty's Capital (none / 0)

Just a clarification : when Piketty talks of r, it is pre-tax.
That does not mean that tax levels would not have any effect on r, but you can imagine a situation with a high pre-tax r, yet no increase in inequality thanks to taxes -in fact, that is precisely what he would like to achieve, while acknowledging that at world level it is at present a utopia.

Earth provides enough to satisfy every man's need, but not every man's greed. Gandhi

by Cyrille (cyrillev domain yahoo.fr) on Mon Jun 2nd, 2014 at 10:34:17 AM EST
[ Parent ]

Re: Final notes on Piketty's Capital (none / 0)

Overgrown capital has nothing much to do but to corrupt the political power and take it over, create its won reality. Try to prevent that! Capital also has stategic patience, can disguise appearances (even in good times), provide distractions quickly, or threaten to withdraw.

by das monde on Mon Jun 2nd, 2014 at 10:42:22 AM EST
[ Parent ]

Re: Final notes on Piketty's Capital (none / 0)

As usual, Spitznagel is speaking with a very large shovel. The only thing that keeps first-past-the-post capitalists from becoming oligarchs is institutionalized, enforced regulation, the very thing the Ueberklass and its liberal lackeys in government have been frantically dismantling for 35 years.

by rifek on Mon Jun 23rd, 2014 at 09:47:41 PM EST
[ Parent ]

Final notes on Piketty's Capital | 12 comments (12 topical, 0 editorial, 0 hidden)

Top Diaries

Ireland 2023 Rugby World Cup Squad selected

Integrating Ukraine Into NATO Family

Leinster's demise and Munster's hope

Southern Irish disinterest in Northern Ireland affairs

The end is Nigh?

Joe Biden. America's Interventionist Hero

Recent Diaries

NATO Posing the What If Question

Bi-Partisan Effort to Undermine Democracy

June 2023

Ireland 2023 Rugby World Cup Squad selected

Integrating Ukraine Into NATO Family

Southern Irish disinterest in Northern Ireland affairs

Incident Ukrainian War Display Gets Int'l Attention

German Climate Activists Group Outlawed

Leinster's demise and Munster's hope

Joe Biden. America's Interventionist Hero

Targeted Assassinations: a Bankrupt Strategy

The end is Nigh?

Hijacking Peace by Zelensky for War Escalation

UA Drone Attack On Moscow

May 2023

US Provoked Conflict In Europe

U.S. Will Be Ousted From Middle-East

Settler Extremism Blessed by Jerusalem Leaders

Occasional Series