#pikkety

Thomas Piketty, perhaps the most influential economic thinker of the left in the Western world, is impressed by the rise of Sen. Bernie Sanders.

In a post for Le Monde republished on Tuesday by the Guardian, the French economist outlined why he felt the populist senator's ascent spells "the end of the politico-ideological cycle opened by the victory of Ronald Reagan at the 1980 elections." Piketty argues that regardless of Sanders' fate in this particular contest, he has created an opening for similar candidates in the future —"possibly younger and less white" — who could successfully make it into the White House and "change the face of the country."

What's most interesting about Piketty's analysis is that he doesn't see Sanders as following in the footsteps of Europe's social democratic models, but rather leading the United States toward a possible return to the nation's pioneering 20th century experiments with extremely progressive taxation and social spending.

America's golden past: Piketty points to the fact that, prior to Reagan, 20th century fiscal policy in the U.S. was aggressive in taxing the wealthy — much more so than the European counterparts that American leftists are so fond of looking to for inspiration today.

"In the interwar years the country invented a highly progressive income and estate tax and set up levels of fiscal progressiveness never used on our side of the Atlantic," Piketty wrote. "From 1930 to 1980 — for half a century – the rate for the highest U.S. income (over $1 million per year) was on average 82%, with peaks of 91% from the 1940s to 1960s (from Roosevelt to Kennedy), and still as high as 70% during Reagan's election in 1980."

Those rates — which refer to marginal income tax rates, not the rate at which every dollar someone earns is taxed — played a tremendous role in creating social equality and helped provide crucial government revenue for robust social programs that were introduced during Franklin Roosevelt's New Deal and Lyndon Johnson's Great Society.

The U.S. also instituted estate taxes (federal taxes on property transferred from someone who has died to their heirs) that were also extremely high and dwarfed rates in France and Germany.

That all changed after Reagan won the White House. In a bid to "restore a mythical capitalism to have existed in the past," as Piketty put it, he took an axe to the tax code and lowered the rate for the highest incomes to 28%.

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The Role the Stock Market Plays in Concentrating Wealth in the U.S.

This article took some courage to publish, and some real work to write. It draws on freely available (if you know where and what to look for) data from the Federal Reserve to illustrate how much money is taken out of U.S. corporations from dividends, stock buybacks and mergers and acquisitions. Since 1952, U.S. corporations have distributed $14 trillion in inflation-adjusted dividends to shareholders, with 76% of that total, or $10.650 trillion, occurring in just the last thirty years.

My conclusions about the role of shareholders will rub some the wrong way. What I am trying to do here is paint a more objective picture about the real value that shareholders provide to the economy. They do play an important role, to be sure, but it is not what many of us assume it to be, and it comes at a relatively heavy price (more than 5% of our GDP, every year). 

As I say, questioning the value of shareholders here in the U.S. takes some courage. We've come to assume that the goal of "maximizing returns for shareholders" is inseparably tied to the pursuit of profit and even capitalism itself, but it is not, and I am not questioning those very important economic drivers here.

What I am trying to investigate here is the tenet of "shareholder primacy" and how it contributes to the growing problem that this country has with our concentration of wealth. I also attempt to foreshadow what could happen when more of our publicly traded corporations are increasingly automated with robotics and artificial intelligence. This is the "perfect, profit-making machine" and it could accelerate the process of wealth accumulation already underway. 

The way the timing of this piece worked out probably couldn't be worse, given the emotional turmoil wrought by the stock market in recent days.Things usually happen for a reason though, so perhaps this recent roller coaster will help to unleash a different kind of conversation than we might normally have about this very difficult topic. 

#stockmarket   #wealth   #shareholders   #pikkety

Gideon Rosenblatt originally shared:

The Role the Stock Market Plays in Concentrating Wealth in the U.S.

This article took some courage to publish, and some real work to write. It draws on freely available (if you know where and what to look for) data from the Federal Reserve to illustrate how much money is taken out of U.S. corporations from dividends, stock buybacks and mergers and acquisitions. Since 1952, U.S. corporations have distributed $14 trillion in inflation-adjusted dividends to shareholders, with 76% of that total, or $10.650 trillion, occurring in just the last thirty years.

My conclusions about the role of shareholders will rub some the wrong way. What I am trying to do here is paint a more objective picture about the real value that shareholders provide to the economy. They do play an important role, to be sure, but it is not what many of us assume it to be, and it comes at a relatively heavy price (more than 5% of our GDP, every year). 

As I say, questioning the value of shareholders here in the U.S. takes some courage. We've come to assume that the goal of "maximizing returns for shareholders" is inseparably tied to the pursuit of profit and even capitalism itself, but it is not, and I am not questioning those very important economic drivers here.

What I am trying to investigate here is the tenet of "shareholder primacy" and how it contributes to the growing problem that this country has with our concentration of wealth. I also attempt to foreshadow what could happen when more of our publicly traded corporations are increasingly automated with robotics and artificial intelligence. This is the "perfect, profit-making machine" and it could accelerate the process of wealth accumulation already underway. 

The way the timing of this piece worked out probably couldn't be worse, given the emotional turmoil wrought by the stock market in recent days.Things usually happen for a reason though, so perhaps this recent roller coaster will help to unleash a different kind of conversation than we might normally have about this very difficult topic. 

#stockmarket   #wealth   #shareholders   #pikkety  

"Which brings us to the current expansion. Ms. Tcherneva’s data goes only through 2012, so perhaps in the two years since then things have gotten a bit better for most workers. But in the first three years of the current expansion, incomes actually fell for the bottom 90 percent of earners, even as they rose nicely for the top 10 percent. The result: The top 10 percent captured an impossible-seeming 116 percent of income gains during that span."

A simple index drawn from e-books shows which best sellers are going unread (we're looking at you, Piketty).

Lovely method of working out which books are going unread (by analysing the distribution of quotes through the book on Goodreads).

John Maynard Keynes, the author of these words, knew what he was talking about. Few economists have had a bigger impact on either the way the world is governed or the way we think about economic activity. But it is not enough simply to have the right idea: the times have got to suit them, too.

Piketty shrugged: How the French economist dashed Ayn Rand’s fantasies

“Capital in the 21st Century” reveals once and for all that the invisible hand of the market can’t solve inequality