Taking On Adam Smith (and Karl Marx) – NYTimes.com

Having read the first part of the book “Capital in the Twenty-First Century” – it seems well founded and thorough.. and in part pointing to some obvious dynamics of concentration of wealth and power..
But an important thing is how he connects economics to other fields like history and social sciences.. something economists often avoid to do..As they prefer numbers and equations and to avoid analyzing or commenting on the bigger forces in society and politics that heavily influence economic developments..
He addresses this dynamic in particular:

“It is long since past the time when we should have put the question of inequality back at the center of economic analysis and begun asking questions first raised in the nineteenth century. For far too long, economists have neglected the distribution of wealth, partly because of Kuznets’s optimistic conclusions and partly because of the profession’s undue enthusiasm for simplistic mathematical models based on so-called representative agents.”

And more directly:

“To put it bluntly, the discipline of economics has yet to get over its childish passion for mathematics and for purely theoretical and often highly ideological speculation, at the expense of historical research and collaboration with the other social sciences.
Economists are all too often preoccupied with petty mathematical problems of interest only to themselves. This obsession with mathematics is an easy way of acquiring the appearance of scientificity without having to answer the far more complex questions posed by the world we live in. There is one great advantage to being an academic economist in France: here, economists are not highly respected in the academic and intellectual world or by political and financial elites. Hence they must set aside their contempt for other disciplines and their absurd claim to greater scientific legitimacy, despite the fact that they know almost nothing about anything.”

His thesis is also simple..
That fortunes tend to grow faster than the general economy.. thus grabbing an ever larger share..
e then underpins it with data..


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’t mean that Mr. Piketty has turned his back on the intellectual heritage of Karl Marx, who sought to explain the “iron laws” of capitalism. Like Marx, he is fiercely critical of the economic and social inequalities that untrammeled capitalism produces — and, he concludes, will continue to worsen. “I belong to a generation that never had any temptation with the Communist Party; I was too young for that,” Mr. Piketty said, in a long interview in his small, airless office here at the Paris School of Economics. “So it’s easier in a way to reopen these big issues about capitalism and inequality with a fresh eye, because I was too young for that fight. I don’t have to justify myself as being pro-communist or pro-capitalist.”

In his new book “Capital in the Twenty-First Century” (Harvard University Press), Mr. Piketty, 42, has written a blockbuster, at least in the world of economics. His book punctures earlier assumptions about the benevolence of advanced capitalism and forecasts sharply increasing inequality of wealth in industrialized countries, with deep and deleterious impact on democratic values of justice and fairness.


Jamie Dimon: I don’t mind paying higher taxes to help solve economic crisis

This is how simple it could be put – from the head of the biggest bank JP Morgan: 


Jamie Dimon: I don’t mind paying higher taxes to help solve economic crisis – The Hill’s On The Money:

“I don’t mind paying 39.6 percent in taxes,” Dimon told the Council on Foreign Relations. “I want a society which is always getting more equitable.”


1% – or just a handful.


Tipping over.

As we’ve noticed before a majority of the 1% would like to pay higher taxes, just a few percentagepoints more to fix the country and get moving with a mixed approach of revenue and mostly spending cuts.

And numbers now show that this 1% accounts for about 14.000 families, while the 0.1% is a group with an average income of $30 million.

But the problem might just boil down to a handful of people. Most humans can’t handle unlimited power and wealth. You get brain damage. Kochs, Murdochs, Nero, Hitler, Napoleon, Gaddafi, all unhinged rulers with dictatorial powers, all suffering from severe delusional disorders.

US mobility. Thing of the Past.

Here are the numbers in regard to economic (and thus social) mobility.


American Dream moved to Denmark.


From TPM:

In his widely trumpeted speech at the conservative Heritage Foundation Wednesday, Republican budget guru and liberal boogeyman Rep. Paul Ryan of Wisconsin rejected the notion that wealthier Americans should pay higher taxes to sustain or broaden a social safety net for poor and middle class workers and retirees.

Instead, he argued, policy should be geared toward allowing high earners to grow the economy, and to facilitate upward mobility for the working class. America, he argued, exemplifies the latter model while European economies illustrate the perils of the former.

[..] Turns out that is — not true.

Full story.

Historical Moments.

This picture has a little of that iconic quality of historical moments when a society stands right at or in the process of passing a tipping point. A peaceful assembly to protest an obvious loss of democratic rights and influence is met with a screaming authority figure and reluctant horses. And it looks so futile. Even the horses understand that this is wrong.


Times Square, New York City.


And in some ways the whole scam of 1980-2008 might have reached its logical endpoint, when all credit was exhausted. The People and the Country are broke, Government is fully corrupted and a tiny 1% have taken everything. No matter what the spin of others, no matter how the occupy movement should evolve or get succeeded by or warp into some other form of movement, no matter how things might quiet down with the colder winter or have some brief periods of inactivity and silence, this simple dynamic of a massive pushback from the whole population cannot be restrained for very much longer. If you take all the marbles the other kids will come after you.

Revolutions – now and 1789.


Not the best example.

Sometimes when one reviews some old topic of interest with fresh new eyes – things suddenly appear a bit different. Watching a documentary about the French Revolution last night was one of these moments.

And in some sense, it really didn’t go that well.

Consider this: It was very bloody, very mismanaged, it introduced a new period of chaos and violence, and it led to more decades of tyranny, imperial disasters and return of the monarchies. Leading figures like Robespierre were just dreamy young boys with lots of romantic talk while chopping off heads. And the prime document of pride for the revolutionaries, the “Declaration of the Rights of Man and the Citizen”, was done way better by Thomas Jefferson thirteen years earlier. While some might say that the French Revolution is the most important event in Western History, one could perhaps with some merit argue that both Athens, Rome, Florence and Philadelphia are far more important in both symbolics, originality, cultural impact and the role of being pivotal moments in time.

Moreover; the general thoughts about democracy and equality are probably tens of thousands of years old, as the normal and peaceful way of organizing big groups of people into communities and societies, even if history tends to skew the picture and focus on violence and problems. All of these basic principles and dynamics were written down beautifully by the Greeks some 2.500 years ago, while the ideas about the middle road and moderation are represented in variations in so many cultures and peoples throughout our written history.

So the revolts in 1789 might seem more to be a starting point of a long process towards a peaceful and representative democracy in France – but it could have been done so much better and faster. Without all this unnecessary violence and disruptive decades that followed. And the intellectual and philosophical substance of the movement is in some ways little more than some patchy and recycled snippets of Ancient Classics with perhaps a little French twist to it. But it is by no means new.

So what are the relevant lessons from all of this. Perhaps that decade-long supression and inequality could lead to self-destructive and uncontrollable revolts by the masses. That rapid change in society needs to be managed well to succeed. That chaos attracts and worships destructive personalities. And that renewal after decline and corruption is complicated and slow. But also, that societies often gravitate back to some sort of fair distribution of rights and resources among the population after an unhealthy concentration amongst a few over time.

We’ll see how this decade evolves.

Sunday Post: The Sources of Happiness.

Sometimes it’s good with a small reminder – that life and society should be guided by a mix of different things, and value things like people and happiness, along with income and growth.


A buddhist society - with a plurality of goals for a happy life.

Dr. Sachs has great food for thought – reporting from the Mountain Kingdom of Bhutan.

We live in a time of high anxiety. Despite the world’s unprecedented total wealth, there is vast insecurity, unrest, and dissatisfaction. In the United States, a large majority of Americans believe that the country is “on the wrong track”. Pessimism has soared. The same is true in many other places.

Against this backdrop, the time has come to reconsider the basic sources of happiness in our economic life. The relentless pursuit of higher income is leading to unprecedented inequality and anxiety, rather than to greater happiness and life satisfaction. Economic progress is important and can greatly improve the quality of life, but only if it is pursued in line with other goals.

In this respect, the Himalayan Kingdom of Bhutan has been leading the way. Forty years ago, Bhutan’s fourth king, young and newly installed, made a remarkable choice: Bhutan should pursue “gross national happiness” (GNH) rather than gross national product. Since then, the country has been experimenting with an alternative, holistic approach to development that emphasises not only economic growth, but also culture, mental health, compassion, and community.

[..] The mad pursuit of corporate profits is threatening us all. To be sure, we should support economic growth and development, but only in a broader context: one that promotes environmental sustainability and the values of compassion and honesty that are required for social trust. The search for happiness should not be confined to the beautiful mountain kingdom of Bhutan.

Full story.