Dilip Simeon's blog

Capital in the Twenty-First Century by  Thomas Piketty Reviewed by   ST EVEN ERLANGER By debunking the idea that “wealth raises all boats,” Mr. Piketty has thrown down a challenge to democratic governments to deal with an increasing gap between the rich and the poor  PARIS — Thomas Piketty turned 18 in 1989, when the  Berlin Wall  fell, so he was spared the tortured, decades-long French intellectual debate about the virtues and vices of communism. Even more telling, he remembers, was a trip he took with a close friend to Romania in early 1990, after the collapse of the Soviet empire. “This sort of vaccinated me for life against lazy, anticapitalist rhetoric, because when you see these empty shops, you see these people queuing for nothing in the street,” he said, “it became clear to me that we need private property and market institutions, not just for economic efficiency but for personal freedom.” But his disenchantment with communism doesn’...

India’s rentier capitalism is an inset in the big picture drawn by Thomas Piketty French economist Thomas Piketty has written a scholarly tome with the humdrum title, Capital in the 21st Century. The book has become an overnight sensation because Piketty documents an inherent tendency for ever-increasing inequality of income and wealth in capitalist economic systems. It is not an accident, he says, that many will be left behind even as others become richer. The book taps into a collective anxiety, coming as it does amidst the lingering after-effects of the global crisis and slowing global growth. India’s capitalist dynamic — as in other emerging economies — is different from that in the richer countries that Piketty focuses on. Yet, the lessons Piketty offers should ring a cautionary bell. Indeed, even more so than in the rich countries, India could find itself in a low growth, high inequality and high insecurity trap. These are the real fears that bubble under the theatrics and u...

"Maybe the reason young radical thinkers are not impressed by pleas to recognize “ambiguity and contingency” is because what they have seen in their lifetimes is a lesson in some pretty unambiguous facts about how capitalism works. Even rock-ribbed neoclassical economists are coming around to the view that forty years of stagnant wages might have something to do with the attack on unions; that the decline of the labor movement in turn accelerated the shift to the right in politics; that this shift in turn led to a pretty successful evisceration of what little social support the state gave to the poor; that when the mad rush for short-term profits finally drove the economy into the tank, the state returned the favor by passing off the costs to the public and handed over trillions of dollars to the banks. There was no contingency or ambiguity in any of this. It was a quite predictable result of a highly successful class war that transferred political power firmly over to el...

DOMINANT FINANCE AND STAGNANT ECONOMIES  by Sunanda Sen ; 2014 CAPITAL IN THE TWENTY-FIRST CENTURY  by Thomas Piketty ; 2014 Reviewed by Aseem Shrivastava THE globalized world is a case of a long and bushy tail wagging a virtually strangulated dog, the tail wrapping and gnarling itself around the latter, restricting any possibility of free movement, while itself indulging in an extravagant dance. The tail represents the increasingly bloated financial sector, while the dog is the ‘real’ economy, including the massive working population. More accurately, picture a pack of such dogs (and puppies) – led by a pack leader. Imagine that in each case their growth is led by the long, twisting tails, inextricably tied together. The dogs gyrate helplessly each time the tail get excited or depressed. It is evident from the outcomes where the centre of gravity of economic policy lies today. The real economy dances to the tune that global finance sets. Two excellent new vo...

Developing explanations for the growth in inequality over the last three decades has been a huge growth industry in economics and policy circles. Many economists have made their careers with a novel explanation of how the natural development of technology and the market has concentrated income and wealth in the top one percent. It's even better if you can show that  inequality hasn't risen . While the explanations that blame inequality on technology can get complicated, there were three items in the last week that painted the picture very clearly for the rest of us. First, we got new data from the Federal Reserve Board and the Census Bureau, both of which showed that typical families are still seeing very little benefit from the recovery to date. The Fed released the 2013 Survey of Consumer Finance which showed median family wealth was still below the 2010 level in spite of the run-up in the stock market. The Census Bureau released its  annual data on income, poverty, and...

Reviewed by Larry Elliott Capital and Ideology expands on the themes sketched out in  Capital in the 21st Century , which sold 2m copies worldwide after its publication in 2013. Piketty’s new book – which runs to 1,232 pages and is as long as War and Peace – explores the ideas that have justified inequality down the ages, bemoans the ineffectiveness of the traditional parties of left and right at coming up with solutions for redistributing wealth, and advances his own ideas for making economies fairer. The book is released in France on Thursday but English language readers will have to wait until next March for the translation. More posts on Piketty Among the proposals in the book are that employees should have 50% of the seats on company boards; that the voting power of even the largest shareholders should be capped at 10%; much higher taxes on property, rising to 90% for the largest estates; a lump sum capital allocation of €120,000 (just over £107,000) to ever...

The gap between the richly rewarded few of tech firms and banks and the rest of us is growing wider. Blame the digital revolution Someone once observed that the difference between Tony Blair and Margaret Thatcher was that whereas Thatcher believed that she was always right, Blair believed not only that he was right but also that he was  good . Visitors to the big technology companies in California come away with the feeling that they have been talking to tech-savvy analogues of Blair. They are fired with a zealous conviction that they are doing great stuff for the world, and proud of the fact that they work insanely hard in the furtherance of that goal. The fact that they are richly rewarded for their dedication is, one is given to believe, incidental. The guys (and they are mostly guys) who manage these good folk are properly respectful of their high-IQ charges. Chief among them is Eric Schmidt, the executive chairman of Google, and a man who takes his responsibilities seriou...

The minimum amount Zucman calculated the wealthy stash in offshore accounts: $7.6 trillion The tools Zucman has identified to date challenge a series of assumptions, fiercely held by many economists and policymakers, about how the world works: That unfettered globalization is a win-win proposition. That low taxes stimulate growth. That billionaires, and the superprofitable companies they found, are proof capitalism works. For Zucman, the evidence suggests otherwise. And without taking action, he argues, we risk an economic and political backlash far more destabilizing than the financial crisis that sparked his work. Gabriel Zucman started his first real job the Monday after the collapse of Lehman Brothers. Fresh from the Paris School of Economics, where he’d studied with a professor named Thomas Piketty, Zucman had lined up an internship at  Exane , the French brokerage firm. He joined a team writing commentary for clients and was given a task that felt absurd: Explain the s...

By Soutik Biswas: Did India’s economic reforms lead to a sharp rise in inequality? New research  by French economists Lucas Chancel and Thomas Piketty, author of Capital, the 2013 bestselling book on capitalism and increasing inequality, clearly points to this conclusion. They studied household consumption surveys, federal accounts and income tax data from 1922 - when the tax was introduced in India - to 2014. The data shows that the share of national income accruing to the top 1% of wage earners is now at its highest level since Indians began paying income tax. The economists say the top 1% of the earners captured less than 21% of the total income in the late 1930s, before dropping to 6% in the early 1980s and rising to 22% today. India, in fact, comes out as a country with one of the highest increase in top 1% income share concentration over the past 30 years," they say. How India’s currency ban is hurting the poor Is India winning the war on poverty? ...

Piketty’s  Capital in the Twenty-First Century  is an indispensable book for anyone interested in learning more about the unequal distribution of wealth in the world today. As I read this major 950-page study, which is supplemented by a large amount of statistical data and tables available on Internet), it became obvious that the Occupy Wall Street movement and others in its wake were completely right to target the richest 1 percent... https://www.cadtm.org/Concentration-of-wealth-in-the-hands-of-the-1 The evolution of wealth inequalities over the last two centuries Concerning the lion’s  share  possessed by the top 1 percent in 1789, Piketty underlines that the denunciation of the 1 percent by Occupy Wall Street combined with the proclamation “We are the 99 percent” is somewhat reminiscent of the famous pamphlet  “Qu’est-ce que le tiers état?”  ( “What is the Third Estate” ) published in January 1789 by Abbot Sieyès… https://www.cadtm.org/The-evolution-of-...