There are already plenty of reasons to take a dim view of Piketty’s leveling ideas on wealth. Here’s another (H/T, Econlog):
I think it would be a big mistake to oppose the objective of global progressive taxation of income and wealth with the objective of class struggle and political fight, for at least two reasons. First, making this tax reform possible would require a huge mobilization. This has always been the case in the past. All the big revolutions engendered a big tax reform. Take the French Revolution, the American Revolution, or World War One: although it was not a fiscal revolution initially, through the Bolshevik Revolution, it had a huge impact on the acceptance of a progressive tax regime and more generally social welfare institutions after World War One – and even more so after World War Two. These were fiercely opposed by the elite and by the right just before these shocks, so this shows that we need a big fight and sometimes violent shocks to make progressive tax accepted. It would be a big mistake to think of progressive taxation as a technocratic process that comes quietly from a minister and experts. This is not at all the history of taxation.
The man was interviewed and had his comments published in a blog rather aptly called Potemkin (not sure how ironic that is).
Perry Metzger, who writes occasionally for Samizdata, nicely skewered Piketty’s reasoning a few months ago.
Of all the legion of bad outcomes that result from political ambition, the most striking of our times is surely the euro, an unashamedly political project bolted on to sovereign European nations of long and proud competing traditions in the hope of making them more like the United States, at least in terms of economic prowess.
– Jeremy Warner.
Yet Oxfam also claims, without any real evidence, that excessive inequality hampers economic growth. It suggests that, since we want that economic pie to be as large as possible, we should tax wealth and capital. The problem is that all taxes destroy some economic activity, shrinking that pie. And different taxes do so differently. We also know that capital and wealth taxes destroy more of the pie than almost any others (other than that Robin Hood Tax Oxfam also supported). So the argument is that we must shrink the economic pie in order to stop inequality shrinking it. This has shades of having to destroy the village so as to save it.
– Tim Worstall
Detractors will try to argue that the poorest quintiles have a smaller percentage of the overall pie. And that might be true, but the pie is much, much bigger. Would you rather have 50 percent of a million or 20 percent of a billion? Another way of putting this is: Would you rather be better off, even if that meant certain people were super well off? Or would you rather everyone were worse off, as long as everyone were relatively equal?
That the poorest among us are still, on balance, doing better today than they were 50 years ago is a remarkable testimony to what relatively free people and markets can do, even as governments put up roadblocks. So if the poor aren’t getting poorer, why do people say they are?
– Max Borders
Peretti is no stranger to bizarre theories. His recent offerings for the BBC have included The Men Who Made Us Fat and The Men Who Made Us Spend. Personal responsibility doesn’t seem to be on his ideological radar. This is fine, but we should expect more from a public broadcaster than to repeat theories nobody subscribes to, particularly when we are forced to pay for the privilege.
When they denounce “trickle-down economics”, Peretti and the figures above project their own world view. For many of them, it is spending that matters to an economy – and they disagree that the rich having more money to spend is as beneficial as others having it following redistribution.
Yet free marketeers don’t believe in low taxes because of their effect on spending. They believe in low taxes because they provide a strong incentive to earn more income in the first place. And the best way to earn more in a competitive, dynamic, market economy is to provide goods and services people want. Low taxes can therefore engender the sorts of entrepreneurial activity that enrich our lives through better and cheaper products – the productivity improvements we recognise as economic growth.
– Ryan Bourne
Likewise, in terms of domestic European politics, giving in to far-left Syriza would certainly strengthen economic illiterates in popular anti-euro parties like Italy’s Five-Star Movement, and Spain’s Podemos, the last thing Merkel desires. The euro itself hasn’t been particularly troubled by the crisis, with Italian and French bond yields holding steady. Surely, as some have reported, Merkel is right to think that now is the time to sever the weakest link.
– John Hulsman
“Greece versus Europe: who will blink first?” asks the Telegraph. I care not who blinks, or who wins this contest of braggarts. All that matters is that for Greece to be ejected from the Euro would be good for Greece, good for Germany, and a good example for all the peoples of Europe yoked together in this vainglorious folly. Go on Germany, give that Marxist fool Alexis Tsipras a demonstration that your gullibility is not endless. Go on Greece, plough your own furrow and while you are at it give the Eurocrats a demonstration that their most public and cherished commitments can fail. Remember “Black Wednesday”? Far from being a disaster for Britain, that was the day its fortunes began to recover.
Big Bang transformed the City for the better, as I hoped at the time. It broke up the cosy cartel of the old stockbrokers and jobbers, introduced competition into commissions which made share buying and selling so much cheaper, allowed in many foreign banks and brokers with extra capital, new business and job opportunities, and allowed UK institutions to raise serious amounts of new money to operate on a world scale.
It built one of the dominant financial service and banking sectors of the world. The City expanded from the narrow Square Mile around the Bank of England, to encompass Aldgate, Liverpool Street, the Finsbury area , parts of Mayfair, St Paul’s and parts of docklands. Today we earn £60 billion from our financial and business service exports, and have a group of companies and service industries that the world envies. Without Big Bang none of that would have happened, and the UK would be a lot poorer. Instead of blaming Big Bang for financial scandals, people should remember there were scandals before Big Bang, and remember above all that it was Mr Brown’s regulators who helped bring on the crash they were meant to prevent.
– John Redwood
I think Big Bang did bad things (speeding up the mess of fiat money) as well as good (doing lots of business in London). The more Austrianist you are, the earlier you will think the rot set in. Nixon takes Dollar off Gold Standard in 1971? Founding of the Fed? Founding of the Bank of England? But Redwood is right that Gordon Brown certainly didn’t help avert the crisis we are now stuck in, even if him keeping Britain out of the Euro may prove to be his most significant decision in the long run.
Remember, just because one of us here selects something as an SQotD doesn’t mean we necessarily agree. We are merely noticing that something significant, and usually true-ish, has been forcefully put.
Browsing one of those coffee-table sort of magazines you get in the flashier reception rooms in City offices, I flicked through the magazine called Monocle, which has lots of travel articles and advertisements for things I cannot afford, such as IWC watches, Maserati sports cars and holidays to “eco-resorts” in the Indian Ocean, etc. Laced with all this are earnest, remorselessly trendy essays on politics and culture. The undertone is progressive-lefty globalist, with a bit of concession, to be fair, to entrepreneurial vigour and technology. (Some of its items are excellent.) There is a sort of default setting on issues such as Man-made global warming, but the level of preaching is soft. It is a magazine, I imagine, that is pitched at affluent people who want the good things of life but want to feel they are still being “cool”.
I sometimes think that those on the libertarian/classical liberal/conservative end of the spectrum are missing a bit of a trick here by not producing things such as this. Ideas often spread not simply through big books full of Important Ideas (crucial though they are) or from having lots of university professors who espouse such notions (these are crucial of course) but also through aspects of popular and more rarified culture. I mean things such as art galleries, travel magazines and novels. It appears to me – though I have no scientific way of measuring this – that travel mags and books, for example (think National Geographic, Rough Guide books) seem to be edited by people who just trot out the bromides of the progressive, Tranzi mindset without really thinking about their premises. Here is a classic example from the Monocle issue 49 that came out in the end of 2011, on page 43. It is an article about so-called “soft power” and what countries must do to project it. Needless to say, its assumptions are that governments (ie, the taxpayer) should do it:
“The term for soft power may have been coined in America, but Washington has always seemed more focused on demonstrating heavy-handed military power or confrontational commercial tactics than investing in soft power symbols such as an official tourist board.”
America needs a tourist board, otherwise who knows? People might not be aware that the world’s largest economy exists. What an oversight.
Or this nugget:
“Despite the absence of a national tourism board – or a modern, well-run national airline – the US still attracts millions of visitors every year.”
Let’s think about this for a bit. The Monocle author says it is a bit odd that so many people go on vacation to the US despite that country not having a bunch of bureaucrats and marketing folk (paid for by taxes) saying what a terrific place the US is. (Surely states and cities do promote themselves, though. California puts up adverts in the UK.)
People just seem to be able to figure out that visiting the US can be done and is a nice idea without a national cheerleader organisation. Further, it appears to be a surprise to the author of that piece that this can happen when the US does not appear to have a major, national airline that has some sort of official status. Wow.
The author does recognise that given the sheer size of the country in geographic terms, and the size of its economy, that may be it can get by without such things. But does it not cross the mind of the author that the reason why some nations (it mentions a whole cluster of them) have a positive image for travellers has nothing to do with state-financed marketing moves or state-backed broadcasters such as the BBC, but because of the bottom-up, free market nature of activity in some of these places that creates things people want to have and which therefore are good for a country’s image? Ironically, Monocle is stuffed with glossy adverts for all manner of brands that speak of the triumph of capitalism, and an admiration for the people who make it work.
I think that if governments really do want to influence opinions in the wider world about what, say, the UK or US is about, the best way to do this is to get out of the way and let the actions and words of people, uninfluenced by government, do the job. Cultural outreach works best when governments have nothing to do with it, since otherwise it reeks of propaganda. Whether you like or dislie these effusions of the market, I’d say that the manufacturers of Rolex watches, BMW cars or pop music do more for the respective images of their countries than anything likely to come out of a government-backed broadcaster or tourism board.
In a Reuters article titled British EU exit debate scaring off investment – Hermes funds I hit a line that made me go: say what?
Political rhetoric raising the possibility that Britain may leave the European Union could already be deterring foreign investment and harming London’s financial services industry, a top UK investor said (…) Another effect could be to weaken the allure of the City of London as a base for international financial systems with rival banking and investment hubs New York, Singapore and Zurich likely to benefit.
I was particularly struck by “and Zurich”. So Zurich, also in Europe but not in the EU, will benefit if London is not in the EU? Really?
I love the idea that prosperity can be decreed by a G20 communiqué. World leaders in Brisbane have airily committed themselves to two per cent growth. (Why only two per cent? Why not 20 per cent? Or 200 per cent? Who knew it was so easy?) Meanwhile, in the real world, the divergence between Continental Europe and the rest of the planet accelerates.
– Daniel Hannan