Thomas Piketty’s Capital in the Twenty-First Century is a doorstopper, 696 pages chockablock with statistics and literary references — which makes it an unlikely catalyst of mass chaos. Yet according to many progressives, that’s exactly what it is.
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Paul Krugman reports that “conservatives are terrified.” Paul Mason of The Guardian says Piketty has “sent rightwing economics into a frenzy.” Thom Hartmann says “conservatives are scared straight by a Frenchman.”
Sacré bleu! You’d think Piketty was Émile Zola, J’accusing us of covering up a major crime. Instead Capital in the Twenty-First Century is a well-researched book that’s inspired polite debate.
If conservatives are falling to their knees and ripping their shirts open in the middle of the street, I haven’t seen it. It’s been a rather quiet week, actually. My phone hasn’t rung.
Plenty of economists have already addressed the shortcomings of Piketty’s arguments — his obsessive focus on inequality at the expense of other problems, his incomplete statistics, his simplistic dichotomy of capital returns vs. economic growth. So let’s focus on his remedies.
Piketty calls for a global wealth tax, an 80 percent income tax on Americans making more than $500,000 a year, and a 60 percent income tax on those making more than $200,000 a year. He blithely assures us that the wealthy wouldn’t flee to Canada and warns that, if we don’t take his advice, inequality will increase over the next century.
In other words, Piketty is living in a fantasy world where Congress is in the habit of passing obscenely high tax rates and economists can accurately predict what will happen decades in the future. Piketty himself admits that many of his solutions amount to a utopia, but at least Thomas More’s vision had some plausible parts. Piketty has given us an exercise in pure whimsy.
This begs the question: Why write a book about public policy that’s disconnected from the public and will never become policy?
Chris Hayes has a similar problem. His recent column, called “The New Abolitionism,” doesn’t measure up to Piketty’s 696 pages, but manages to feel longer. Hayes argues that the world should wean itself off the $20 trillion fossil fuel industry just like the South detached from its $10 trillion slave economy after the Civil War.
Hayes’s analogy is gobsmackingly offensive and illogical (this is the guy who once compared gun control to inclement weather delays), but even if it contained a wood splinter of common sense, it would still be at odds with reality. Unlike slavery, fossil fuels aren’t concentrated in one region; they’re a global product that supply 81 percent of the world’s energy and make our modern standard of living possible. Meanwhile renewable sources have received more than $154 billion in American subsidies since 1973, yet only 0.2 percent of our nation’s energy comes from solar.
Hayes, like Piketty, is operating in a faculty-lounge Dimension X of variables and chalk dust, where vast economic systems are reduced to morality tales (fossil fuels bad, solar panels good) that governments can effectively control. Back in the real world, power comes from derricks, not windmills, and sweeping plans for economic change have a stubborn habit of backfiring.
Look at France, which recently implemented a Piketty-esque 75 percent tax on top incomes, and is considered an economic basket case, with anemic growth and residents fleeing to London and Belgium.
Look at Britain, which saw 10,000 of its taxpaying millionaires move overseas or trim their incomes after the top marginal tax rate was raised 10 percent, and having now repealed the tax hike and cut spending is growing at the fastest rate since 2007.
So you’ll forgive conservatives if we’re not chugging hemlock at the prospect of Piketty’s book. His projections are unlikely, his ideas are untenable — and maybe that’s not surprising. As Kyle Smith points out, Piketty confessed that he’s only left Paris a few times over the past seventeen years.
That makes Piketty one of the few wealthy Frenchmen who hasn’t headed for the border. If he’ll accept advice from a lowly politics major: He should tear himself away from the statistics and try the real world for a change. There’s a lot to like here, even if massive government interventions don’t work.