Reddit reviews Capital in the Twenty-First Century

I read Thomas Pickety's "Capital in the 21st Century"
https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617
And it was quite an economic tome. I can't properly articulate the work, but he made the case that economic growth in the future is not going to be as high as it was in the decades after WWII. Most likely, 1% is what to expect. 3.5% is a fantasy.

A very good book was written on this topic by French economist Thomas Piketty:

Capital in the 21st Century

https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617

If you're a logic based person then you should research social mobility and generational transfer of wealth.

I would suggest Thomas Piketty's Capital in the 21st Century for a logical and evidence-filled examination of this subject.
https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617

I guess to me what's reasonable should be indexed both against individual need (accounting for everything from survival to comforts to self actualization, all within the realm of encouraging entrepreneurship) and societal need. I figure leaving an heir $100M sets them up for life, and if they're smart with the money, sets up their children and grandchildren as well. That's 4 generations, at least, of wealth and power. 3 generations that don't have to do a damned thing but oversee their investment managers. If a multibillionaire's fortune can go to fund healthcare, or poverty assistance programs, or education, or job training, and still leave his heirs $100M or so, what is the problem? What's the great tragedy or affront to liberty?

And speaking of liberty, consider the disproportionate influence that the wealthy have on public policy. Estate taxes and progressive income taxes work to reduce that disparity in political power. Are you more comfortable in a democratic republic or a plutocracy? Thomas Piketty pretty much wrote the definitive work on the effects of unconstrained wealth accumulation. A low tax policy doesn't bode well for our future.

"The Federal Housing Administration, or FHA, requires a credit score of at least 500 to buy a home with an FHA loan. A minimum of 580 is needed to make the minimum down payment of 3.5%. However, many lenders require a score of 620 to 640 to qualify"

So that means they still need established credit AND a down payment. In other words credit and at least a little wealth. As for adult schools, there are highly educated people working shitty low paying jobs because that's whats out there. This seems a lot like you want it to be a certain way, the by the boot straps, get educated, buy a house, etc. mantra, that's just not how it actually works. It is possible to be educated and hard working and to be stuck in poverty.

You're reducing a huge and complex issue into the Republican "Pull yourself up by your boot straps", they are just lazy explanation. Thing is, when you look at data and have also lived this shit first hand, you realize it is not so simple. You realize that there are plenty of educated hard working people that will never escape poverty, not because they don't try but because of how our society is structured and the various intersections of identities and social constructs. When exactly does a single parent raising 2 kids have time between their children's needs and their 2 jobs to go to school? These are the sorts of things people don't think about. What the reality is, not what they want it to be.

Americans want to believe that hard work will get you ahead in life, but we live in a oligarchy and it's about networking more so than skill sets and hard work. Hell corporate structure itself limits opportunity for promotion with its top down approach. 80 employees and 1 management spot, not a lot of opportunity. There's a multitude of influences playing out, and those influences affect one's ability to climb out of poverty. Also, those Adult School have been traditionally made for White people, most education opportunity throughout US History has been made to specifically assist Whites, not poor PoC.

The Meritocracy Myth - https://www.amazon.com/Meritocracy-Myth-Stephen-J-McNamee/dp/1442219823/ref=pd_lpo_sbs_14_img_0?_encoding=UTF8&psc=1&refRID=0X1W94PHVX1MTDTXX4SF

Oligarchy Study - https://www.cambridge.org/core/journals/perspectives-on-politics/article/testing-theories-of-american-politics-elites-interest-groups-and-average-citizens/62327F513959D0A304D4893B382B992B

Capital in the 21st Century - https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617

I'm sure there are some good books on the matter, and hopefully someone else in this sub will have some recommendations for you as well.

Politics and economics make terrible bedfellows, but if you would like to know about policy making some historical books would probably be in order.

Lords of Finance

Piketty's Capital

Sorkin's Too Big to Fail

And most readers of this sub know that nearly anything by Michael Lewis is good, if a bit dramatized.


Really though, economic policy making is done mostly by politicians, or politically motivated economists. The politicians don't have a clue about economics, and the economists tend to be picked by the politicians for saying what the politicians like to hear.

This is more a political question than a finance question. The guys in finance don't really care who's in office as long as regulatory capture is still around.

> Basically he proves the key flaw of Libertarianis - there are times when government should get in the way of the free market to protect the citizens.

Which is exactly why I never got a hard on for Libertarianism. Its so frustrating when someone like Gary Johnson is so right on almost ALL the issues, and then so illogically dead wrong on some of the biggest.

Global warming is the largest disaster facing humanity. This is not idle speculation. The most intelligent and researched beings on this planet have long reached consensus on this issue. Anyone who says otherwise simply has not done the research.

Yet here gary johnson advocates that the free market will take care of everything. Yet, he knows thats not true.

Wealth and power concentrates without government interference. This is what Thomas Piketty has proven in his book on capitalism which is not just theory or speculation, but based on using empirical evidence from 30 countries going back to the 17th century.


>The wealthy are getting wealthier while everybody else is struggling. Inequality will widen to the point where it becomes unsustainable – both politically and economically – unless action is taken to redistribute income and wealth. Piketty favours a graduated wealth tax and 80% income tax for those on the highest salaries.

This is not a capitalism problem, this is a human problem. Capitalism is just one form of governing that has taken shape in modern history. Its better than theocracy or monarchies in regards to inequality, but still suffers the same issue. Wealth and power concentrates. Without regulation, that concentration becomes a monopoly that always acts within its best interest.

This is the problem with humanity, and libertarianism does not fix it. It enables it to go full blown retard. The only way that you can fix wealth and power from being over-concentrated is through a constitution and government regulation. Maybe in the future we will have AI to govern us. Its our only chance at saving ourselves, by removing humanity from governing.

Now, we all know all the fuckups of the past and the current. There is obviously good regulation and bad regulation. The issue is that we cannot decide on which ones to expand and which ones to cut back.

But anyone who thinks anarchy or full blown deregulation can fix anything have not thought this through. The existence of humanity literally depends on it.

And a footnote on ALL of this - There is no fucking free market. Anyone who thinks there is a free market is delusional. The free market exists in theory, but not in practice. The genie is out of the bottle. Wealth and power in concentrated forms exist. There never is and never was, in modern society, a free market. There are always players with more power that will dominate the game, people with power to rig the system. Thats not a "free" market. The board was never equal and never will be. The health of Society requires that monopolies be abolished. So we have to ask ourselves....do we want inequality and massive suffering, or do we want a balanced society? Some of you want the way of the old, where if you paid the iron price you could be king. Well you heathens can go live in filthy fucking forests and fight to the death then.

Bitcoiners should especially know this. Why do you guys think there is so much "game theory" applied to bitcoin? Because all systems get gamed.

To be fair, my evidence is more than anecdotal (at least as far as the estate tax goes) My argument here is more or less lifted from Pickety. (https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617)
Or at least the historical trends of ratio of income to wealth. A consumption tax would realllly make this significantly worse (IMHO). I contend that having vast differences in the amount of wealth inequality is bad. Income inequality, much less so, as that is income earned by a person, and in theroy, that money is related to the good for society.

this? https://smile.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617

One of the useful stats I recall from Piketty's Capital in the 21st Century is that a salary (for the US) of $135k puts you in the top 10% of earners. Considering the way that distribution goes the top 1% earn substantially more than the top 10%.

My point is that top 10% income is good enough for FI/RE if you control your spending.

Nah, a good world war can equalize things nicely, too. Really, no joking, that's exactly what has reduced wealth disparity in the past.

There are no examples of the poor being made not-poor by war, but plenty of examples of the rich being ruined.

Source: Capital in the 21st Century

>pretty much. cut corporate taxes and raise income tax to offset. Ultimately, if the concern is executive pay, just tax executive pay more. populist motivation for corporate taxation just seems to be motivated by a dislike and distrust of corporations.

This doesn't happen though. It NEVER happens. Republicans want ALL taxes cut. Point to where any have suggested raising taxes on the wealthy. And the wealthy dont even make the vast majority of their wealth through income, its through investments. You want to speak to raising taxes, raise them on the wealthy where they might feel a bit of a squeeze. The lower and middle class has been the ones that have been squeezed to offset the recklessness of corporations and banks. How much wealth was lost after 2008? Those bailouts of the banks werent paid for by the rich. And im not here to demonize those at the top, thats just stupid. Hard work can lead to wealth, sometimes. But just like in the past (like pre-1970s), those at the top did pay substantially more in taxes, and both they and the country did much better. Ill just defer to Piketty who explains this much better than me.

>If Republicans see right through the minimum wage increase issue, then where are the Republican success stories with their approach

Ultimately, I'm just asking where have Republicans put forth their economic ideas and have them work? What cities or states?

i decided this when i've read this book

https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617

Ouch. I guess that you have an issue with that phrase. I guess I should provide some links for the data/statistics crowd.

Middle class is shrinking
http://billmoyers.com/2015/01/26/middle-class/

Productivity vs wages
https://aflcio.org/2015/1/15/five-causes-wage-stagnation-united-states

Household debt vs savings
http://www.alt-market.com/articles/1104-false-prosperity-through-debt

Impact on the middle class because of globalization (elephant chart)
http://business.financialpost.com/news/economy/get-ready-to-see-this-globalization-elephant-chart-over-and-over-again/wcm/c8b93ceb-197b-46fb-8aec-21961adaced3

Unions membership vs income share of top 10%
https://whistlinginthewind.org/2012/07/29/the-benefits-of-unions/

Total wealth (Bottom 90% vs 0.1%)
http://progresoweekly.us/us-wealth-inequality-top-0-1-worth-much-bottom-90/

2/3 of Americans aren't contributing to a 401K
https://www.bloomberg.com/news/articles/2017-02-21/two-thirds-of-americans-aren-t-putting-money-in-their-401-k

Decline in defined pension plans
https://squarelyrooted.com/tag/fun-with-charts/

33% has $0/56% has less than $10K in their retirement funds
http://time.com/money/4258451/retirement-savings-survey/

The rate of growth of capital is greater than economic growth.
https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617

Take all these charts in consideration and you get the rise of Trumpism. (Mark Blyth)
https://www.youtube.com/watch?v=Bkm2Vfj42FY

Now...maybe it shouldn't be described as "widespread inequality". How about just inequality that is increasing?

No, the goal of the post was to persuade people that "not giving up" is all it takes to be a part of the "1%", and that's bullshit. Check out this book: https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617

>Do you see how illogical that is? You are questioning the preferences of millions of people and instead trying to put your preferred value on somebody's labor.

Markets don't just exist sui generis and are also prone to failure, sometimes in surprising ways. A CEO's salary isn't just determined by his "skills" or by supply and demand; information assymetries; leverage; tax policies; and societal norms and customs also play a role. In the U.S., the average CEO makes 354 times more than the average worker. In Israel and Japan, two countries home to some of the world's more dynamic economies, the gap is 76 and 67 times respectively. Do you think that supply and demand and the skill gap explain the entirety of that disparity?

https://www.washingtonpost.com/news/wonk/wp/2014/09/25/the-pay-gap-between-ceos-and-workers-is-much-worse-than-you-realize/?utm_term=.7094064afc74

>Skill disparity. The further back in time you go, the simpler an economy was and the skill disparity between the most and least was less. The supply for the skills required at the time was higher and the price was lower. The more complex the economy gets, the more skills will be required for many of its positions and the higher that pay disparity will be.

I agree that skill differentials can help explain some of the disparities in income we see today. But I also think your argument offers a more compelling explanation for the differences in wages we see between now and 1850, not now and the 1970s. Do you think doctors have all of a sudden become vastly more skilled now than they were back then? As I said in my earlier comment, I think that tax policy, globalization (which you could certainly make a good argument has exacerbated the skill differential problem you cite), and the evisceration of unions explain the decline in workers wages relative to CEOs far better than just "the market." Put in other terms, markets don't exist in a vacuum, and each of the factors I've cited above had important influence.

>Source? If you bring up top marginal rates as your answer then I'd like to facepalm in advance. I'd like to see the source accounting for deductions and the income brackets of those marginal rates. I'll answer this one for you: you're wrong. Either way, how is this relevant to your point?

In 1953, the effective tax rate on income for the wealthy was 70 percent. The average effective tax rate, including capital gains, was 49 percent. Today, it's 29 percent.

Source:

https://www.bloomberg.com/view/articles/2013-01-02/1950s-tax-fantasy-is-a-republican-nightmare

I get where you're going though, and I totally agree that the most effective way for the government to gain more revenue may not be to raise back income tax brackets back to where they were in the 1950s. We probably need a VAT, especially on luxury goods, and also to more aggressively tax obvious negative externalities (carbon emissions, cough cough).

>>The economy grew faster

Source: http://www.tradingeconomics.com/united-states/gdp-growth-annual

If you put in a trendline, you'll see that GDP growth in the U.S. has trended downward from over 4% in 1950 to about 2.5% today. My point is that there's very little evidence that higher taxes on the wealthy lead to slow economic growth, despite what supply siders think.

>They still do. Real wages may not grow as fast, but total compensation does. Compensation is a lot more than just the salary.

Source? About what about real compensation? Real compensation per worker? By most measures, real incomes for the middle and lower classes have stagnated or decreased for the past forty years, while incomes of the wealthy have skyrocketed.

>>Absolutely. The way to do that is to vote and get involved, isn't it? Most money in public policy by the wealthy and corporations isn't used to get some advantage, its used to prevent encroaching regulations on their activities which is what government has been doing aggressively since around WW2.

If you include "attempting to accumulate market power" in your definition of "preventing encroaching regulations," I'd agree with you. Most modern corporations don't really exist in a competitive free market - they're either oligopolies (Google, Facebook, etc), local monopolies (the telecom industry), or directly dependent on the government to keep their businesses competitive and afloat (defense industry, agribusiness). Many "encroaching regulations" are designed to shield companies from competition.

For excellent further reading on how the wealthy use their wealth and their power to make themselves wealthier and more powerful that will answer virtually all of your arguments more eloquently than I possible could, please read:

Jacob Hacker and Paul Pierson, Winner Take All Politics
https://www.amazon.com/Winner-Take-All-Politics-Washington-Richer-Turned/dp/1416588701

Thomas Picketty, Capital in the Twenty First Century
https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617

Anthony Downs, "An Economic Theory of Political Action in Democracy" :
https://www.jstor.org/stable/1827369?seq=1#page_scan_tab_contents

The non cliff notes is 800 pages. Rate of return on capital > growth isn't good for anyone. Especially the middle class though.

https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617

http://www.pbs.org/wnet/ascentofmoney/featured/the-ascent-of-money-episode-1-from-bullion-to-bubbles/44/


https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617

Capital in the Twenty-First Century, is a good place to start. The magnum opus of a celebrated economist.

He's French though, and it's a book, so I understand if you don't want to read such a "hoity-toity liberal" thing.

Holy shit do you really not know how to fucking read? You're responding to a post that says:

>This is what Piketty's Capital is about. I'm kind of surprised you didn't hear about one of the most groundbreaking works of economics to come out in recent years: it was a major news story. Piketty was a guest on every TV show from CNN to the Daily Show.


https://www.amazon.com/Capital-Twenty-First-Century-Thomas-Piketty/dp/1491591617