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A Critique Of Piketty's Solution To Widening Wealth Inequality

Tyler Durden's picture




 

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The real problem with Piketty's taxation/social welfare solution to wealth inequality is that it does nothing to change the source of systemic inequality, debt-based neofeudalism and neocolonialism.

Those of us concerned by widening wealth/income inequality have been following the work of Thomas Piketty and Emmanuel Saez for many years. I've cited their analysis many times; for example: Two Americas: The Gap Between the Top 5% and the Bottom 95% Widens (August 18, 2010).

Thomas Piketty has taken his meticulous research and turned it into a book, Capital in the Twenty-First Century, that has catalyzed the discussion of widening inequality by essentially proving that capital expands at rates far above the overall economy and wages. Since capital grows much faster than wages or the underlying economy, the gap between earned income and unearned income (rents) widens, along with the net worth of those who own capital and those who own little to no capital.

Here is a chart from his work with Saez, showing how the top 10% has pulled away from the bottom 90%:

This chart shows how the income of the bottom 90% has been stagnant for 40 years:

This chart shows how capital's growth rate causes the very top layer of owners of capital to outpace their less-wealthy peers: the top 10% have outpaced the bottom 90%, the top 1% has outpaced the top 10%, the top .1% has outpaced the 1%, and the top .01% has outpaced the .1%.

As other reviewers have noted, Piketty's book is not a theoretical critique of capitalism, it is a data-driven exploration of how present-day capitalism drives wealth inequality. Piketty's solution to widening inequality is a global wealth tax, a solution he characterizes as utopian, for getting the world's nations to eradicate tax havens is close to impossible.

I would go further and say it is impossible within the U.S., never mind the world, as the top .1% own the political machinery. Why would anyone who owns the political process agree to tax themselves?

As a result, any wealth tax will fall not on the super-wealthy with billions of dollars of unearned rentier income but on the upper-middle class who worked, saved and invested to build a nestegg. In other words, a wealth tax will fall on the same tax donkeys who are already paying the majority of income taxes.

If I have contributed anything to the wealth inequality issue, it is the proposition that we live in a neofeudal, neocolonial economy (the New Feudalism), ruled by a New Nobility. In my analysis, neofeudalism arises from these characteristics:

1. Debt is the enforcement mechanism of feudal fealty. Debtors--those with mortgages, student loans, vehicle loans, credit card balances, etc.--are obligated to fund the rentier income of their financial masters, the New Nobility. This is the essence of a feudal arrangement.

Others have different definitions of neofeudalism.

In my analysis, the rise of neofeudalism is a direct consequence of the financialization of the economy, in which essential assets (homes, for example) and processes are commoditized into financial instruments that can be sold, leveraged, pyramided and traded globally. Once an asset or process has been commoditized, it loses all connection to individuals, communities, companies or nations: it is the perfection ofrootless capital, free to be bought and sold anywhere, any time, with no connection to the real world other than a chain of claims.

2. Society and the economy are organized so only the wealthy do not need to go into debt, which is serfdom in a neofeudal arrangement. The illusion of choice is thus maintained, a sibling of the illusion of democracy in which both party candidates are in thrall to the New Nobility.

The fiendishly Orwellian brilliance of neofedualism is this: present-day serfs opt into serfdom, just as free citizens opted into the protection of feudal lords' estates as the Roman Empire crumbled around them. It was a false choice; remain free and face ruinous taxes, or choose serfdom on a lord's estate. The present economy offers an equivalent false choice for all but the most dedicated, disciplined few who reject debt by rejecting consumerism, "growth" and the endless spew of neofeudal propaganda.

Want a college education? You freely choose the servitude of debt.

Want a house? You freely choose the servitude of debt.

Want a new vehicle? You freely choose the servitude of debt.

Neocolonialism is tightly bound to neofeudalism in my model.

3. The essence of neocolonialism is the "company store," which extends credit that can never be paid off as wages are stagnant. In a neocolonial economy in which only the top Caste of Managers, Technocrats and Professionals (the top 10%) can expand their income and wealth, debt-serfs are impoverished by servicing debt. As the real (inflation-adjusted) incomes of the bottom 90% decline or stagnate, debt service consumes an increasing amount of disposable earned income.

Debt service is guaranteed in the neocolonial model. In the old colonial model, marginalized populations were recruited to work on plantations with the false promise of wages, which never quite exceed the cost of servicing debt.

This arrangement was much neater than slavery, as the marginalized need not be bought: they freely choose their servitude. Beneath this supposed free will is of course a false choice: there is no other way to earn cash income other than working on the debt-plantation.

In the old colonial model, only those ethnicities with an iron passion for saving regardless of income (for example, the Chinese, among others), were able to accumulate enough capital to escape the debt-bondage and establish small businesses.

I explain the basic structure of neofeudalism and the neocolonialism in The E.U., Neofeudalism and the Neocolonial-Financialization Model (May 24, 2012)

The problem with Piketty's solution to the intrinsic inequalities created by financialization, neofeudalism and neocolonialism is the super-wealthy might well agree to tax those beneath them, just to prop up the arrangement that benefits them so mightily. I can easily foresee a political movement, secretly funded by the New Nobility, that taxes all wealth above $1 million, but which magically excludes wealth-holders that just happen to be the top .1%.

The New Nobility might even agree to pay a modest wealth tax, which would fund millions more recipients of food stamps, Section 8 housing and other social welfare, in effect institutionalizing neofeudalism and neocolonialism by rendering the unemployed complicit in the arrangement.

If you owned $100 million, and were earning $5 million in rentier income annually, wouldn't you agree to a $1 million tax to fund social welfare programs that kept the rabble sedated with bread and circuses? It's a no-brainer.

The real problem with Piketty's taxation/social welfare solution to wealth inequality is that it does nothing to change the source of systemic inequality, debt-based neofeudalism and neocolonialism. Simply raising more taxes to fund more social welfare programs leaves the unjust, rapacious, and ultimately destabilizing Status Quo entirely intact.

I have laid out another path in my books: refuse serfdom, abandon participation in neofeudalism and neocolonialism, and build parallel systems of cooperation and wealth-building that are not debt-dependent.

 

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Mon, 04/28/2014 - 13:37 | 4704524 Skin666
Skin666's picture

This french asshole is an academic, i.e a fucking moron...

 

Nuff Said

Mon, 04/28/2014 - 13:48 | 4704559 Grande Tetons
Grande Tetons's picture

Speaking of assholes....Krugman seems to endorse the Piketty puke. 

http://www.nytimes.com/2014/04/25/opinion/krugman-the-piketty-panic.html...

If Krugman gives it the A ok...that is enough for me to know that the work is shit. 

 

Mon, 04/28/2014 - 13:59 | 4704592 The Juggernaut
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Communism is just to employ government.

Mon, 04/28/2014 - 14:30 | 4704732 NotApplicable
NotApplicable's picture

"I came here not to praise capitalism, but to bury it." -- Picketty

 

May you rot in Hell, you fucking evil asshole.

Mon, 04/28/2014 - 17:06 | 4705397 Greenskeeper_Carl
Greenskeeper_Carl's picture

no book that speaks about the problem of 'income inequality' and doesn't have the federal reserve, or central banks in general, as its central theme is worth the paper its printed on. Fed/govt created inflation is driving up the price of the basics at a pace that incomes cannot and will not keep up with, at least not for the avg person. It used to be a complaint about 'inflation' ravaging the middle class. Now, with all the money printing, they don't want to mention the word inflation in that context, since that might make the average serf get a little curious about what exactly QE means. So now their new talking point is income inequality. In escense, they propose that govt solve the income inequality problem that the govt/central banks created. Fucking brilliant. want to make a more level playing field? END THE FED

Mon, 04/28/2014 - 17:43 | 4705524 Optimusprime
Optimusprime's picture

NOT worth the paper it is printed on--I bet that is what you meant, and if so, I concur.  A really valuable work would go into the ethnic dimensions of all this "financialization" stuff. C'mon guys, isn't this getting obvious?

Mon, 04/28/2014 - 18:33 | 4705402 falak pema
falak pema's picture

Hey, even Shakespeare never said that about anybody else other than Caesar, and for good reason, as Caesar stays the ultimate reference for despotism today in the West : KAISER-IDEE !!

You have to understand, as CHS has very aptly pointed out, the Pax Americana mindset has warped--- like that of Caesar--- by crossing a new Rubicon on Aldous Huxley day, through the cracked mirror of Capitalism gone Neo-feudal. 

That mindset change then left the trail that has been so oft discussed here on ZH; aka : Peak Oil, Peak War Mongering, Peak Fiat profileration as DEBT, post BW revoke and via derivative bubbleonomics of Dear Ronnie, as a result of Peak Hubris.

It has subsequently totally corrupted all the threads of Industrial civilization whose iconic ORCHESTRATOR has been US capitalism, AS PRACTICED since inception post WW2 -- not as imagined by the delusional like you.

 So getting hot under the collar of your invisible handed free market cloak of righteousness; like a Harry Potter playing Quidditch at Hogwarts; is all pure Fellowship of the Ring stuff; all Lady Shalott  of the Lake moaning about the lousy mirror that cracks from side to side.

IT AIN'T that illuson, it is irrefutable reality; the type of reality that Piketty's analysis is driven by; facts and figures over three centuries of painstaking analysis; as CHS does not contest either.

Irrefutable documented stuff... So if the premise is impeccable so is the conclusion, to  anybody who understands Shakespearean rhetoric and Greek logic.

As for CHS's critique of Piketty where he objects to his not pointing to the rise of the NWO of neo-feudal mindset, I think he does Piketty too much honour.

Piketty, as an honest economist, was NOT TRYING to outstep his own avowed brief of understanding if the rentier economy was cancerous for society or not. His demonstration shows that in a rentier capitalist system the tendency for concentration of capital ineluctably leads to rentier R>G type dystopia, until the bubble bursts as seen on a recurrent basis in the past, and the cycle rebegins in hopium after much blood and tears.

Piketty was NOT trying to establish a correlation of his Economic analysis with the geopolitical and  societal issues which CHS is pointing to. I think CHS is right in his conclusions about the NWO Pax American social order morph. But he is wrong about Piketty's lack of perception of that larger picture.

As an honest handy-man Piketty never SET himself that goal in his research brief. He was not trying to APE Marx; and we all KNOW WHY. Marx, like Piketty, was right about analysing the basic evil of the capital accumulation process, but he was WRONG about the solution; aka his elaboration of a deterministic political model that led to totalitarian government and corruption of society.

Piketty does not want to go down that road. He is more modest. Lets at least acknowledge that limitation that he has imposed on himself. It is a rare thing these days when a technician of economics does not want to play at being the Einstein of geopolitics. 

ZH knows the people, economic Nobelista Shamans that I have in mind...who love to play that role.

 

Mon, 04/28/2014 - 13:52 | 4704572 James_Cole
James_Cole's picture

This french asshole is an academic, i.e a fucking moron...

Yeah, what have academic researchers ever accomplished anyway? (types on computer keyboard, connected to internet, running on fiber optic cable...)

Mon, 04/28/2014 - 14:45 | 4704803 Skin666
Skin666's picture

I'm talking about 'academics'... Paid shills that lick the jackboots of power and violence

Mon, 04/28/2014 - 15:40 | 4705076 hot sauce technician
hot sauce technician's picture

Your comment smell like the manure of israeli coastal plain chickens.

The academics he's talking about are the priests and princes of the humanities and social "sciences". Those whose real world experiences amount to kissing privileged asses and flying business class to conferences. The ones who spout bullshit of no practical value and that the free market wouldn't be able to supply with a buyer, yet which exists thanks to public funding.

Your internet connection etc. was developed by physicists, enguneers and other scientists that had to tackle real world problems to get recognition.

Mon, 04/28/2014 - 16:18 | 4705228 James_Cole
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Your internet connection etc. was developed by physicists, enguneers and other scientists that had to tackle real world problems to get recognition.

'Hard science' research is extremely political filled with a whole lot of this: Those whose real world experiences amount to kissing privileged asses and flying business class to conferences. -Not a critique, just point out reality. 

People like to parcel out different sectors of academia to whatever is convienent to their argument moment to moment. Social science is a completely legitimate / necessary area of research. 

Mon, 04/28/2014 - 17:32 | 4705488 hot sauce technician
hot sauce technician's picture

>>>Social science is a completely legitimate / necessary area of research. 

Not more than physics or chemistry bud. I apologize, but if you think otherwise, you're delusional.

Tell me please, what has sociology contributed to the civilized world? Government paid social workers? Politicians? Puh-lease. Cut your losses and bounce. The hacks in the social sciences breathe as such only because there is governement to fund them.

***Note: Not all social "scientists" haven't advanced human knowledge in any way. Admittedly Weber was a smart man as was Freud. But to benefit from any of their knowledge you need to sift through piles of subjective speculating.

Mon, 04/28/2014 - 17:49 | 4705552 Optimusprime
Optimusprime's picture

Tell me please, what has sociology contributed to the civilized world?

 

For starters, Weber's critique of bureaucracy and Rieff's analysis of "Therapeutic" culture.  You paint with too broad a brush, although much trash is certainly produced by those whose academic field is "Sociology".

Tue, 04/29/2014 - 05:50 | 4706883 StandardDeviant
StandardDeviant's picture

"Well, there's the aqueduct..."

Mon, 04/28/2014 - 13:55 | 4704586 LawsofPhysics
LawsofPhysics's picture

Did someone say french?

There is a simple solution.  Roll the motherfucking guillotines already...

nothing changes otherwise.

Mon, 04/28/2014 - 16:05 | 4705166 jopa
jopa's picture

HASTA LA RE

V

OLU

C

ION

SIEMPRE

!

!

!

 

 

Mon, 04/28/2014 - 17:08 | 4705401 Greenskeeper_Carl
Greenskeeper_Carl's picture

i notice you seem to have a similar solution to many of the problems we face today.....

(not being critical)

Mon, 04/28/2014 - 13:55 | 4704589 midtowng
midtowng's picture

Piketty is right about the problem (and proves it), but not about his method of solution.

However, his solution was never the story of his book anyway.

Mon, 04/28/2014 - 14:28 | 4704723 GooseShtepping Moron
GooseShtepping Moron's picture

You're absolutely right, Midtown.

Some of Piketty's gainsayers will get caught up trying to defend capitalism, ignoring the fact that it cannot be defended. Others will go on criticizing socialism, in spite of the fact that socialism is just barren and tiresome word-jugglery, a theoretical inverse of reality, a non-solution. Neither will mention the real problem, that the empires are simply too big. No imputation could possibly establish economic justice between so many people. Decline is the only solution, albeit a pyrrhic one. It may be possible to retain some of the advantages of the modern state while still allowing an advanced degree of decentralization and local automy, but that would require a much wiser and better class of politician than we are used to seeing.

Mon, 04/28/2014 - 14:34 | 4704753 NotApplicable
NotApplicable's picture

LOL WUT? Can't defend freedom? Well, I see you've picked an appropriate identity.

Empires are "too big" for a simple reason. Lack of freedom is a lack of competition for the criminal class.

Mon, 04/28/2014 - 14:38 | 4704775 GooseShtepping Moron
GooseShtepping Moron's picture

Well, I see you've picked an appropriate identity.

Ironic, coming as it does from Mr. Not Applicable, the man with the totally inapposite comment.

Mon, 04/28/2014 - 17:15 | 4705422 Greenskeeper_Carl
Greenskeeper_Carl's picture

i gotta agree with the other guy. We do not have capitalism, in a real sense, anymore. The way things are is not the result of capitalism. Having an unelected entity, that NO ONE is allowed to know whom they are owned by, that can raise and lower interest rates, and print endless reams of the worlds main currency and give it to their buddies at the TBTF banks, and a govt (all of them) who actively pick winners and losers with bailouts, is the antithesis of capitalism. You cannot have capitalism without bankrupcy. You cannot have it without real competition either. It also cannot exist without more concrete property rights. Try restoring all of that, then(plus some other stuff im probably forgetting), if it still doesnt work better for the average person, we can talk.

Mon, 04/28/2014 - 13:38 | 4704526 Itchy and Scratchy
Itchy and Scratchy's picture

Print more money to tax!

Mon, 04/28/2014 - 13:49 | 4704565 CPL
CPL's picture

lol...yup, that's about the long and the short of it.  All wind and no sail.

Mon, 04/28/2014 - 13:44 | 4704543 Catullus
Catullus's picture

Systemic inequality. Also known as nature.

It's the terrifying realization that someone, somewhere may have more than you do. Envy baiting.

Mon, 04/28/2014 - 13:48 | 4704557 LetThemEatRand
LetThemEatRand's picture

It's really not a black and white issue, though everyone seems to want to make it so in order to justify the status quo.  When a system is built on systemic inequality caused by corruption and outright fraud, it is not a defense of it to say that some people are always going to have more than others.   Instead, that is just a convenient excuse to justify criminal behavior and prevent change.  I prefer not to be ruled by a bunch of oligarchs.  Perhaps you feel differently and that is your right.

Mon, 04/28/2014 - 13:54 | 4704580 Catullus
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Then it seems you're more concerned with the means than the ends.

The inequality itself is not the issue. Which is what Pinkedy or whatever this frenchy economist missed. The French socialist wants to go after the inequality itself. And attempts to shift the discourse to focus entirely on this.

Mon, 04/28/2014 - 14:01 | 4704618 LawsofPhysics
LawsofPhysics's picture

The question is not whether or someone "has more that you do".  The question is why?

Did they cure cancer, design a new fusion reactor or build something else of real value?

Or did the simply "create" some financial "product" that steals...

See the real problem yet.

Nature works because nature insures that there are real consequences for bad behavior.

Is that you John Corzine?

Mon, 04/28/2014 - 14:58 | 4704860 general ambivalent
general ambivalent's picture

No, the question is whether there is any value in the act of creation itself. That you use the example of curing cancer and fusion reactors is telling. What is the energy input and energy output for these things? For example, how much cancer is caused in producing the machines and drugs to cure cancer, and how much mining and waste goes into creating fusion reactors? Are the capitalists prepared for the reintroduction of mills and the mines into their backyards? Have any of the capitalists lived in towns filled with the smell of sulphur? If not it may be necessary to rethink the philosophy of isolationism.

If whole populations must be destroyed to create end products then where is the 'real value'? In the product or the act of destruction? It is important to remember that capitalism arises at a time when the material for products arrives from some unknown place, it arises in an age of imperialism. Often 'real  value' develops only through the negation of whole other populations, as in slavery, occupation of other lands, warfare, and colonisation of uninhabited continents (which were really inhabited).

This is extremely important historically, much of capitalism could develop the way it did because of the frontier, a land which allowed for extreme expansionism. It is quite ironic that americanism and capitalism are ideas that completely ignore this aspect within their 'economic theories' and that these groups formally oppose expansionism. Now that there are no more void lands for extreme expansionism, how can capitalism function?

Tue, 04/29/2014 - 07:16 | 4706965 StandardDeviant
StandardDeviant's picture

To begin to unpick any of the interesting points you raise, you're going to have to define your terms.  Specifically, you're going to need a standard of value.

At the risk of winding up LTER, I have to point out that Ayn Rand wrote quite a lot on this subject -- see her non-fiction work, not the novels.

Mon, 04/28/2014 - 16:22 | 4705235 Mediocritas
Mediocritas's picture

Plus nature works because the only thing being inherited is DNA. Even in advanced social animals, once a youngster is old enough to fend for itself it gets kicked out of the family to make its own way (or die), make space for the next batch, and reduce the chance of inbreeding.

Every generation starts from scratch and fights to make it, there's no baby bird inheriting a $billion from dad and leading a coddled life. But talk about a huge inheritance tax and you get spat upon as a "socialist" by some right-wing wannabe monarch, like all of fuckin' nature and billions of years of evolution somehow has it wrong.

Inheritance of wealth is the most powerful engine of inequality, it's what allows the snowball to keep on rolling and has no equivalent in the natural world outside of H. sapiens. The golden years of society are the most meritocratic, when the dynasties are in tatters. Sadly meritocracy inevitably falls into oligarchy as the winners seek to favor their genes through inheritance of wealth, competence be damned. Even the other animals would do the same if they could.

http://www.thenation.com/article/168265/why-elites-fail

Tue, 04/29/2014 - 07:11 | 4706960 StandardDeviant
StandardDeviant's picture

Only DNA is inherited, true; but animals can give their offspring a head start in other ways, such as by providing better nutrition while they're young, occupying a larger/better territory and defending it from predators, passing along learned skills, and so on.

One can argue that it's not "fair" for your child to inherit millions and mine to inherit nothing, but that rather misses the point.  The money belongs to you, the original owner (we'll presume for sake of argument that you came by it honestly), and so it's yours to dispose of as you see fit, either before your death or upon it via a will.

Leave it to your kids or a charity or your cat, bury it with you under a pyramid, or have one heck of a good funeral party for your friends; it's your business and no one else's.

Mon, 04/28/2014 - 14:02 | 4704621 LawsofPhysics
LawsofPhysics's picture

D'oh

Mon, 04/28/2014 - 17:52 | 4705562 Optimusprime
Optimusprime's picture

Well put, sir, and this from a man who has frequently disagreed with you.

Mon, 04/28/2014 - 13:45 | 4704549 Itchy and Scratchy
Itchy and Scratchy's picture

Need to spread the 'misery' around equally!

Mon, 04/28/2014 - 13:45 | 4704550 Disenchanted
Disenchanted's picture

Of course it doesn't provide a real solution.

If it did it wouldn't have been published.

Mon, 04/28/2014 - 13:47 | 4704555 Itchy and Scratchy
Itchy and Scratchy's picture

The Ultimate French Dream : '100% Unemployment!'

Mon, 04/28/2014 - 15:25 | 4704994 machineh
machineh's picture

Let's phrase it more positively, mon ami: 52 weeks vacation!

Mon, 04/28/2014 - 13:50 | 4704566 csmith
csmith's picture

Deflation solves all.

Mon, 04/28/2014 - 13:57 | 4704595 LawsofPhysics
LawsofPhysics's picture

if only there was such a thing...

Name one society/currency that collapsed/died because the purchasing power was too strong.

Mon, 04/28/2014 - 13:52 | 4704574 Itchy and Scratchy
Itchy and Scratchy's picture

'Socialism is the philospophy of ignorance & gospel of envy. Its inherent virtue is the equal sharing of misery.' - Sir Winston Churchill

Mon, 04/28/2014 - 13:56 | 4704593 Seasmoke
Seasmoke's picture

Follow no rules, regulations or even laws until crony capitalism has ended. 

Mon, 04/28/2014 - 16:45 | 4705295 Mediocritas
Mediocritas's picture

So what you're saying is, bring on a free-for-all, dog-eat-dog world (in which you'll probably be one of the first to go), in which Warlordism dominates the bloody landscape until such time as the most brutal of the brutal can establish an unchallenged reign and begin his dynasty.

In other words, a reversion to the way humans operated for thousands of years (feudalism) and an acceleration of the course we are already on thanks to excessive recent application of the very deregulation you crave.

The elites have been shedding all regulation from their backs for decades onto the serfs. I can understand your frustration as one of the serfs, but if you get your way (total deregulation / anarchy), then all that happens is that the elites get replaced with new elites, worse than before, after a period of unnecessary violence.

No, a better solution is to rebalance the regulation. Reduce oppression of the 99% balanced by reduced freedom of the 1% to exploit the 99. In other words: deregulate Main St, re-regulate Wall St.

Mon, 04/28/2014 - 14:02 | 4704625 foodstampbarry
foodstampbarry's picture

FUCK YOU MR. YELLIN!

Mon, 04/28/2014 - 14:02 | 4704628 dbTX
dbTX's picture

You can never get wealthy working hard for yourself, you get wealthy by getting other poor dum serfs to work hard for you. It's always been this way and it will allways be this way, it's just the way the world turns. It's just one of the many things Obama doesn't understand because he has had no real life experiences of any kind. Elections have consequences!

Mon, 04/28/2014 - 15:37 | 4705056 ncdirtdigger
ncdirtdigger's picture

I did not get wealthy working hard for myself (although I am self employed and always have been), I got wealthy working hard for my customers and by providing jobs for those not smart and/or brave enough to go find their own customers. I did not invent the wheel, I just improved upon the delivery of it to the customer.

Tue, 04/29/2014 - 07:20 | 4706970 StandardDeviant
StandardDeviant's picture

Well said, sir!  What pathetic excuse for a human being would vote that down?!

Mon, 04/28/2014 - 14:04 | 4704633 Itchy and Scratchy
Itchy and Scratchy's picture

Raise the debt ceiling!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Mon, 04/28/2014 - 14:06 | 4704644 AurorusBorealus
AurorusBorealus's picture

Picketty´s argument is just Marx´s theory of surplus value restated and Picketty´s solution is just government wealth redistribution, which leads only to increases in government bureaucracy, waste, inefficiencies, and so forth.  Why is anyone with a brain paying any attention to any of this?

Mon, 04/28/2014 - 14:09 | 4704660 Itchy and Scratchy
Itchy and Scratchy's picture

'Cause working is the alternative!

Mon, 04/28/2014 - 15:26 | 4704998 machineh
machineh's picture

Because FrAAAnce is so wildly successful that we are all envious. /sarc

Mon, 04/28/2014 - 14:18 | 4704686 medium giraffe
medium giraffe's picture

It's not MY debt I'm worried about pal. 

Mon, 04/28/2014 - 14:57 | 4704855 messystateofaffairs
messystateofaffairs's picture

Its always challenging to find a new intersexual to creatively repackage the old tried and failed redistribution meme that is so useful for the purposes of the egalitarian class. And of course the usual cheering gallery of useful idiots will be the to most sincerely endorse the virtues of handing out other peoples money. Too bad they don't realize where that money ends up or how it gets there (same goes for freedom)

Mon, 04/28/2014 - 15:02 | 4704879 Totentänzerlied
Totentänzerlied's picture

"free citizens opted into the protection of feudal lords' estates as the Roman Empire crumbled around them."

Uh, yeah, it didn't happen that way.

"In my analysis, the rise of neofeudalism is a direct consequence of the financialization of the economy"

In my analysis, when it rains, things get wet.

Also note the first chart says: "pre-tax" and "excludes government transfers"

At least CHS realizes that raising taxes on the wealthy, even if it were actually possible, would accomplish no benefit for anyone in particular, it would just service the debt interest a tiny bit "faster" (for a few months) or stave off the inevitable bankruptcy of whatever welfare program for a few years. Debt-based society is debt-based society. Taxes and transfer payments cannot - even hypothetically - change that.

Mon, 04/28/2014 - 15:12 | 4704935 kurt
kurt's picture

Oh, I see. Do nothing because the super-rich are going to get away with murder anyway.

Perhaps there is some final solution?

Mon, 04/28/2014 - 16:15 | 4705215 jopa
jopa's picture

HASTA

LA

RE

V

OLUCION

SIEMPRE

!

!

!

Mon, 04/28/2014 - 15:42 | 4705084 besnook
besnook's picture

kinda funny. his conclusions are a simple algorithm of an exponential curve based upon compound interest. the difference between the two competing systems of socialism and capitalism(mixed economy in the middle) is power is money in socialism and money is power in capitalism. the results are the same. the only thing that can change either system is revolution brought by the people or economic collapse. the impetus for revolution is the willingness of the people to revolt, their revolt threshold if you will. since the usa is populated by the dumbest people on earth, don't expect change anytime soon as the dumber the population the higher the revolt threshold....and don't expect the eurotrash to vote against their welfare ponzi. so economic collapse is the solution to restart the cycle all over again.

Mon, 04/28/2014 - 16:16 | 4705222 jopa
jopa's picture

HASTA

LA

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V

OLUCION

SIEMPRE

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Mon, 04/28/2014 - 15:51 | 4705116 JuliaS
JuliaS's picture

Any solution that targets "wealth inequality" and recognizes it as a self-contained problem rather than a natural attribute of a fiat monetary regime, is completely idiotic.

Wealth inequality is not something that can be removed additively. The only way to reduce it is to address the monetary policy while removing all patch solutions offered by intellectuals such as Piketty, Krugman, Freidman, Keynes, Greenspan etc.

Any self proclaimed intellectual that offers to add in order to reduce is full of shit.

Mon, 04/28/2014 - 17:46 | 4705535 RichardParker
RichardParker's picture

It is not an idiotic solution if you are tbe nomenklatura.  As a matter of fact it is a great deal for them.

Mon, 04/28/2014 - 15:55 | 4705132 esum
esum's picture

What can you expect when good paying manufacturing jobs were shippped overseas. What can you expect when the prez is a commie (he denies it but he is a sworn member of the new socialist (communist) party in chicago). Capital haa to compete on the world stage.... ussa labor cant compete... with slave wages. Why does the DOD or any other government agency buy from a foreign vendor? for example Michele Obama's friend who fucked up the healthcare site.. for $674 million.. 

Mon, 04/28/2014 - 19:46 | 4705816 moneybots
moneybots's picture

"What can you expect when good paying manufacturing jobs were shippped overseas."

 

What can you expect when 100% of cycles have a down phase as well as an up phase?  Good paying manufacturiing jobs disappear in a depression, as well as with technological advancement.  Even Foxconn planned on buying a million robots, so Chinese manufacturing jobs will disappear.

Mon, 04/28/2014 - 16:11 | 4705194 tradewithdave
tradewithdave's picture

The Equanom... not debt dependent, but network dependent. 

 

http://tradewithdave.com/?p=20892

Mon, 04/28/2014 - 16:11 | 4705195 NotAMathWhiz
NotAMathWhiz's picture

Any of these discussions without seriously analyzing fractional reserve banking, the federal reserve system and the disconnect between fiat money and gold is simply pissing into the wind.

All of this would be corrected naturally in two generations by eliminating the first two and re-establishing the third.  Oc course, then all of these asshats would be out of a job...

Mon, 04/28/2014 - 17:03 | 4705383 Mediocritas
Mediocritas's picture

How does that solution prevent the next generation of rich kids inheriting the gold (and inequality) from the last generation of rich kids, indefinitely? Inequality exists with or without a gold standard and with, or without a debt-based money system.

That aside, I fully agree with eliminating private sector banks controlling the money supply through credit extension. It's ridiculous that durable goods (with flexible supply) are not represented by an equally durable currency with flexible supply. Our system traded away durability for flexibility. Neither gold or credit is an adequate form of money.

Mon, 04/28/2014 - 17:48 | 4705546 Radical Marijuana
Radical Marijuana's picture

Yes, Mediocritas, NotAMathWhiz's first paragraph was right about what was driving the problem, but his notion that a return to some gold standard would be a solution is ridiculous.

Since money is measurement backed by murder, money based on the measurement of gold is still backed by murder. There are no possible solutions to the debt slavery problems which can operate outside of solutions to the death control difficulties. As my comment below repeats, that is why our problems are going to get way worse than merely being "neofeudalism," and why almost no public debates will be presented about what those real problems actually are, and therefore, what it would really take to resolve them better.

Mon, 04/28/2014 - 16:14 | 4705213 BeetleBailey
BeetleBailey's picture

But Gee...I thought Fuckbama was supposed to fix all this!!!!!

Don't ya fuckin KNOW...the prick is for the little guy...he hates banks....

LOTS of claptrap...no solutions....

Mon, 04/28/2014 - 16:26 | 4705246 malek
malek's picture

Somehow Charles and Picketty missed the biggest source of debt, and therefore serfdom and inequality: the Fed a/k/a central banking.

Mon, 04/28/2014 - 16:41 | 4705285 The Econ Ideal
The Econ Ideal's picture

"Society and the economy are organized so only the wealthy do not need to go into debt, which is serfdom in a neofeudal arrangement."

Plenty of the wealthy build their wealth on debt - taking on debt themselves. In fact, leveraged debt has kept several noted billionaires from catastrophic bankruptcy, and landed some in terminal bankruptcy, from which they remained quite wealthy. This is not recent. 

The recent spate of ultra-low interest rates are virtually open only to the wealthy that use such debt to leverage gains...further putting the quoted statement into question. 

The real issue is the manipulation of rates and the cost of money by Central Banks (the Fed), nominally for the well connected and special interests. This manipulation contributes enormously to the gaps discussed in this article. 

Mon, 04/28/2014 - 18:33 | 4705428 Radical Marijuana
Radical Marijuana's picture

While I agreed with that article on its superficial levels regarding the appropriateness of calling the trends "neofeudalism," that is still a grossly too optimistic view, since that "neofeudalism" is only a phase towards things which are way worse ... Although my pointing out some of the deeper levels will almost certainly not make any significant difference to the trajectory we are on, I will do so irregardless.

First, the SOURCE of the runaway "neofeudalism" is, indeed, the system of private banks being able to make "money" out of nothing as debts, around which system grew up corporations that were adapted to operate within that system. The deeper aspects of that SOURCE are what are propelling us on our tragic trajectory, and therefore, why we are going to be pushed to far worse conditions than merely "neofeudalism" in the future. Furthermore, actually addressing the real SOURCE of that situation relates theoretically to the only possibly sufficiently good solutions (which are practically guaranteed to not be implemented, of course.)

The SOURCE of the debt slavery system was the application of the methods of organized crime to covertly take over the political processes, in order to be able to legalize the counterfeiting of the public "money" supply by private banks, while the government forced everyone else, including the government itself, to operate within that fraud.  Those methods of organized crime operated fractally, to reproduce their effects throughout every aspect of the political economy, which had its foundation become based on fundamentally fraudulent financial accounting systems.

Second, the full effects of those enforced frauds are not merely to develop attitudes of evil deliberate ignorance towards the social polarization that it causes, but also, and much worse, it also enables attitudes of evil deliberate ignorance towards the consequences of what a civilization controlled by frauds, in the form of debt engines, does to the natural world, since that fraudulence finances the strip-mining of the planet. That fraudulent financial accounting system is a runaway debt engine, which becomes a treadmill of social insanities, which are far worse than merely driving irreconcilable social polarization, because that goes towards destruction of the natural environment in irreparable ways.

The deeper problems relate to understanding how and why the methods of organized crime were able to be applied through the political processes, in order to constantly legalize bigger lies, which would be backed up by more legalized violence, which were the runaway mechanisms whereby the "neofeudalism" was driven. Unless one is much more serious about understanding how and why the methods of organized crime control society, then there are no genuinely good solutions to better resolve those problems. However, since the established systems of privatizing the profits, while socializing the losses, continue to generate more private profits from frauds, to be able to again use through the funding of the political processes, to legalize still more frauds, there is no practical way to stop that happening, and thus, no practical point to understanding those mechanisms, other than maybe doing that for its own sake?

As always, the debt controls are backed up by the death controls, through the combined money/murder systems. However, since our society has developed through the history of warfare to operate its death controls through the maximum possible deceits (which included that the old-fashioned religions and ideologies were controlled opposition, which share the same basic frame of reference which facilitated those deceits), it is practically impossible for our society to collectively comprehend and cope with the ways that money is measurement backed by murder. Instead, what has actually developed is that the death controls based on deceits have morphed into the debt controls based on frauds, while, again, almost the entire society, including both the establishment doing that, and the controlled opposition appearing to be against it, shared in operating out of the same fundamentally fraudulent frame of reference.

Thus, there are practically zero realistic chances that our almost completely corrupt and crazy civilization is going to be able to sufficient understand how the political economy operates inside the human ecology, as seen in how the debt controls operate inside the death controls. But nevertheless, those are the real factors that are driving the debt slavery systems to produce the conditions of "neofeudalism." Hence, the deeper reasons why things are way worse, than merely the phases of "neofeudalism," are that the debt slavery system treadmills necessarily drive their numbers towards debt insanities. Since those debt controls were always backed by death controls, the runaway debt insanities will provoke runaway death insanities, and that will not merely be within human society, but will also be spread throughout the entire natural world too.

The supreme paradoxes continue to be that human history has selected for civilization to be controlled by the maximum possible deceits and frauds, in its murder and money systems, and those deceits and frauds were shared just as much, if not more so, by the controlled opposition religions and ideologies, which operated in co-opted conjunction with those developing combined murder/money systems. Therefore, it is pretty well totally impossible for our society to have any kinds of political debates which come even remotely close to being rational regarding these topics, despite the progress in other areas of science and technology, which have enabled some human beings to have tools which are trillions of times more powerful and capable than ever before in human history.

In theory, we should go through radical paradigm shifts in the ways that we understand human civilizations as general energy systems, embedded in the general energy systems of their environment. However, the ways that civilization actually operate at the present time are through the biggest bullies' bullshit world views, which are shared just as much by the controlled opposition groups, if not more so, as with the biggest bullies themselves, because history has selected for the biggest bullies to operate their murder systems on the basis of the maximum possible deceits, which was the foundation for them to operate their financial systems on the basis of the maximum possible frauds, while the co-opted controlled opposition groups, manifesting as various religions and ideologies, were even more full of the same kinds of bullshit that the biggest bullies approved of. Furthermore, the biggest bullies' bullshit world views have also dominated the history of the philosophy of science too, which has enabled scientific technologies to become primarily employed to be better at being dishonest, and backing that up with violence, by creating globalized systems of electonic frauds, backed by the threat of the force of atomic bombs.

In that overall context, therefore, while I agreed with this article regarding the problems of the emerging "neofeudalism," it was otherwise way too shallow, and its "solutions" at the end were laughably superficial. The real problems are that the debt controls are backed by the death controls, and the runaway debt insanities are driving us towards death insanities, which are going to be far worse than merely a return to "neofeudalism." Furthermore, the only actually workable solutions for the political economy problems must be included inside of workable solutions for the human ecology problems, which necessarily means different death control systems. (Moreover, as if that was not already tough enough, the same principles also have to be applied to the emerging issues of industrial ecologies.)

The crucial dilemmas all revolve around the historical facts that our real death controls were selected to operate through the maximum possible deceits, which included the controlled opposition to those systems also operating within the same frame of reference of those deceits, only in more idealized ways, which backfired badly, as they were designed to do. Therefore, the SOURCE of the "neofeudalism" was the application of the methods of organized crime to dominate the political processes, through vicious spirals in its funding, enabling frauds, which frauds then enabled more funding of politics, to enable more frauds, and so on and so forth, towards the current states of "neofeudalism."

However, since the actual SOURCE of the debt slavery monetary and taxation systems was the methods of organized crime, there are actually no genuine solutions which are not also based upon understanding the principles of organized crime, and which operate by applying the methods of organized crime. That is, money will continue to be measurement backed by murder. The real systems will continue to have their most crucial controls be their death controls ... Tragically, since our civilization is way too psychotically insane to be able to face those facts about itself, there are no other more probable scenarios than that the phases of "neofeudalisms" are merely transitions towards situations which will be far worse than that.

Since the only genuine better resolutions to these problems would require better death controls, in which a better militarism backed up a better monetary system, but our society is currently controlled by doing those things through the maximum possible deceits and frauds about themselves, throughout both those operating those systems, as well as throughout the controlled opposition groups that appear to be against them, the prospects for better death controls to back up better debt controls may as well be on the dark side of the moon, rather than set to rise on the horizon of history on planet Earth.

Mon, 04/28/2014 - 17:26 | 4705466 polak potrafi
polak potrafi's picture

zapeszyc

na maksa

 

So far the plan is super simple.

In a few months Chineese discover

that they choked off all the bees

 

After that go birds, cats, dogs, rats

and finally the poor working class of China

that has to smoke cigaretts through a special hole in the face mask

 

This shall mean that the replacement

of the steel collateral

by the iron collateral

encounters an unexpected hurdle...

 

and China goes bust

 

The capital flees

to the open arms of Frau Jelen

claimining that the only thing

theat she can do to ease the global tensions

is to stop the QE for the US Treasuries

 

At the deciseve moment

Politburo of PRC hesitates to do the same

so Frau Jelen unloads the full bandwagon

of the Treasuries from her balance sheet

to the hands of shitless scared global "investors"

wondering only

HOW LOW BELOW ZERO IT WILL GO...

 

and just then Mr. Piketty smiles

seeing his tax on capital

right on :)

Mon, 04/28/2014 - 17:43 | 4705525 Loophole
Loophole's picture

What's wrong with unequal wealth distribution? If one person produces more than another, so what?

This book is just another rationalization for some stealing wealth from others who produce it,

Mon, 04/28/2014 - 18:04 | 4705591 Radical Marijuana
Radical Marijuana's picture

Loophole, the production of destruction controls production. The primary reason for the unequal wealth distribution was the legalized creation of the public "money" supply out of nothing by private banks, which exists due to the historical successes of applying the methods of organized crime to dominate the political processes.

From that perspective, after more than a Century in the USA, and about three Centuries in the British Empire, of legalized counterfeiting of the public "money" supply by private banks, the degrees to which those frauds have accomplished robberies have taken on astronmically sized proportions. Therefore, more recommended solutions would require far greater levels of "robbing the robbers" than was proposed.

Mon, 04/28/2014 - 18:12 | 4705602 polak potrafi
polak potrafi's picture

Dear

Loophole

 

There is nothing wrong with unequal wealth distribution. As there was nothing wrong with masters and slaves in ancient Greece. The only problem is that masters should care for the slaves. Provide food, drinks, roof over head, medication. If masters drive all the slaves to death, then the masters will need to WORK BY THEMSELVES.

 

We just try to fix the system so it can continue :)

Mon, 04/28/2014 - 18:33 | 4705655 robobbob
robobbob's picture

 I can easily foresee a political movement, secretly funded by the New Nobility,,,,,

talk about a well spoken but very out of touch writer.

not "A" movement, but dozens, have been in operation since at least the 1800's. A major one is known marxism. all the way from marx himself being a "kept" man, to troksy and lenin's mysterious lifestyles without any means of support, and oh yes, the un-named one himself, Mr H.

Like alchemists, capitalists have been incessantly experimenting with just the righ mixtures of promises, entitlements, debt, and tyranny, to create their private utopia on earth. Fascism, socialism, communism. All forms of enslaving the masses, often with their own consent. For all the rest who are not part of the club, it is an increasing visible prison. I only hope to live long enough to laugh at all of the fallen useful idiots who thought they were part of the club, only to find themselves lined up against the same wall as the rest of us.

Mon, 04/28/2014 - 19:04 | 4705721 polak potrafi
polak potrafi's picture

to explain

our position

 

Neither the RICH, nor the POOR will be happy to hear the truth:

 

The real revolution is not to steal from the rich and give to the poor...

the real revolution is to stop the rich from stealing EVEN MORE from the poor.

 

                                                                                        Janosik, 1712

 

Mon, 04/28/2014 - 19:38 | 4705796 moneybots
moneybots's picture

"Thomas Piketty has taken his meticulous research and turned it into a book, Capital in the Twenty-First Century, that has catalyzed the discussion of widening inequality by essentially proving that capital expands at rates far above the overall economy and wages."

 

DEBT is what has expanded at rates far above the economy. As Karl Denninger has noted, subtract debt from GDP and U.S. GDP has been negative for over 30 years.

 

A RECORD CREDIT BUBBLE !!!!!!!!!

 

Capital comes from savings.  ZIRP is destroying savings, thus capital.

 

Piketty is quite the fiction writer.

Mon, 04/28/2014 - 19:38 | 4705797 Flying Wombat
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