Piketty’s New Book

Review here (pdf)

I am generally a free markets, don’t tell me what to do and don’t take my stuff kind of guy, but I’ve been stopped dead in my tracks considering whether I agree or not with this sentence (I’m less sure than I was):

Piketty sees a role for high (“confiscatory”) taxation.

Piketty himself is no doubt more nuanced but this will become a hymnbook for the left-wing choir, who will use it to frame all economic activity as a tradeoff between evil return on capital (r) and good overall growth of the economy (g). In eras where growth is higher than the return on capital, prosperity brings about a golden age (there’s been only one). The rest of the time?

But far from making this high r a good thing for the economy, he regards it, unless checked by higher taxation, as a portender of disaster.

So the point of high taxation isn’t even to raise revenue so much, it’s to reduce the return on capital while preserving the growth.

Does it make sense to try to engineer another golden era through deliberate effort? The thought of humans trying to recreate an entire economic equilibrium through globally coordinated policy changes makes me nauseous. Remember, this golden era was a short-lived exception to history, not the rule.

This seems to be a work of morality and politics, despite the scientific sheen. In that realm it could well be successful. But luckily no entity has the power to give an honest test to the hubris of brilliant economists.

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