[Graeme]

Capitalism simply isn't working and here are the reasons why

$this->bbcode_second_pass_quote('', 'S')uddenly, there is a new economist making waves – and he is not on the right. At the conference of the Institute of New Economic Thinking in Toronto last week, Thomas Piketty's book Capital in the Twenty-First Century got at least one mention at every session I attended. You have to go back to the 1970s and Milton Friedman for a single economist to have had such an impact.

Like Friedman, Piketty is a man for the times. For 1970s anxieties about inflation substitute today's concerns about the emergence of the plutocratic rich and their impact on economy and society. Piketty is in no doubt, as he indicates in an interview in today's Observer New Review, that the current level of rising wealth inequality, set to grow still further, now imperils the very future of capitalism. He has proved it.

It is a startling thesis and one extraordinarily unwelcome to those who think capitalism and inequality need each other. Capitalism requires inequality of wealth, runs this right-of-centre argument, to stimulate risk-taking and effort; governments trying to stem it with taxes on wealth, capital, inheritance and property kill the goose that lays the golden egg. Thus Messrs Cameron and Osborne faithfully champion lower inheritance taxes, refuse to reshape the council tax and boast about the business-friendly low capital gains and corporation tax regime.



As a result, the burden of paying for public goods such as education, health and housing is increasingly shouldered by average taxpayers, who don't have the wherewithal to sustain them. Wealth inequality thus becomes a recipe for slowing, innovation-averse, rentier economies, tougher working conditions and degraded public services. Meanwhile, the rich get ever richer and more detached from the societies of which they are part: not by merit or hard work, but simply because they are lucky enough to be in command of capital receiving higher returns than wages over time. Our collective sense of justice is outraged.

The lesson of the past is that societies try to protect themselves: they close their borders or have revolutions – or end up going to war. Piketty fears a repeat. His critics argue that with higher living standards resentment of the ultra-rich may no longer be as great – and his data is under intense scrutiny for mistakes. So far it has all held up.

Nor does it seem likely that human beings' inherent sense of justice has been suspended. Of course the reaction plays out differently in different eras: I suspect some of the energy behind Scottish nationalism is the desire to build a country where toxic wealth inequalities are less indulged than in England.

The solutions – a top income tax rate of up to 80%, effective inheritance tax, proper property taxes and, because the issue is global, a global wealth tax – are currently inconceivable.

But as Piketty says, the task of economists is to make them more conceivable. Capital certainly does that.

[Plantagenet]

$this->bbcode_second_pass_quote('Graeme', ' ')Piketty is in no doubt, as he indicates in an interview in today's Observer New Review, that the current level of rising wealth inequality, set to grow still further, now imperils the very future of capitalism.

[Graeme]

It's a bitter pill to swallow. Of course, you would be for his remedies. .

[Keith_McClary]

$this->bbcode_second_pass_quote('Plantagenet', 'A')s someone who lives in a US state with perhaps the lowest level of wealth inequality in the entire US (Alaska), I 'd just like to point out that the places with the highest levels of wealth inequality are typically blue states, with the most atrocious levels of income inequality occurring precisely in the liberal strongholds of Detroit, Chicago, SF, NY, etc.

If folks really want to reduce wealth inequality, the way to do it is to create a vibrant, capitalist private sector that is generating high-wage jobs in the private sector as Alaska and SD have done.

[Plantagenet]

$this->bbcode_second_pass_quote('Keith_McClary', 'I') guess the free oil money payments from the gubmint also helps to equalise.

[Graeme]

Norway is going to use it's sovereign wealth fund to invest in renewables in an effort to cut ghg emissions.

$this->bbcode_second_pass_quote('', 'O')n Thursday, Norway’s Prime Minister Erna Solberg announced plans to invest more of the nation’s $840 billion sovereign wealth fund in renewable energy in an effort to cut greenhouse gas emissions as the country struggles to meet its 2020 climate goals.

[kublikhan]

$this->bbcode_second_pass_quote('Plantagenet', '')$this->bbcode_second_pass_quote('Keith_McClary', 'I') guess the free oil money payments from the gubmint also helps to equalise.

[Plantagenet]

$this->bbcode_second_pass_quote('kublikhan', 'A')laska has over 5000 barrels of proven oil reserves for every man woman and child in Alaska. Michigan has 3. Somehow I don't see the same policies in Alaska working in Detroit.

[Keith_McClary]

$this->bbcode_second_pass_quote('Plantagenet', '')$this->bbcode_second_pass_quote('Keith_McClary', 'I') guess the free oil money payments from the gubmint also helps to equalise.

[Simon_R]

$this->bbcode_second_pass_quote('', 'I')'m a socialist like you - I think the resources belong to the people and the revenues should go into a collectivist sovereign fund.

[GHung]

Capitalism - "The Snake that swallows its own tail."

[Plantagenet]

$this->bbcode_second_pass_quote('Keith_McClary', '
')I'm a socialist like you - I think the resources belong to the people and the revenues should go into a collectivist sovereign fund.

[kublikhan]

$this->bbcode_second_pass_quote('Plantagenet', 'H')ave you heard of a process called "frakking"? If not, I suggest you google it.

You see, Michigan actually might benefit from the same policies as Alaska if you could convince your legislators to allow "frakking" and energy production in Michigan. Your shale is likely to produce more gas than oil, but NG prices are moving up fast after last winter.

Michigan also has significant wind power resources along the Great Lakes.

I suggest you stop bemoaning Michigan's lack of oil, and go out and lobby your state legislators to allow frakking and then start building some windmills and find some natural gas in Michigan. Unleash the capitalist beast within you --- Yeeeeeee HAH!

[Plantagenet]

$this->bbcode_second_pass_quote('kublikhan', ' ')Detroit is not going to be bailed out ….

As for natural gas prices, they are falling …. It is not wise to promote further natural gas production at a time when prices are not high enough to bring in the big profits

[HARM]

$this->bbcode_second_pass_quote('', '&')quot;3. The Prudhoe Bay oilfield lies under Alaska state land and is owned by the people of the state of Alaska. The royalty oil and taxes collected from the oilcos operating at Prudhoe have nothing to do with socialism or collectivism---the oilcos are private businesses and their taxes are part of CAPITALISM---the Alaska sovereign wealth fund is CAPITALIST to the core----the dividends paid to the sovereign wealth stock fund owners (i.e. Alaskans) are a fundamental part of CAPITALISM."

[Plantagenet]

$this->bbcode_second_pass_quote('HARM', '')$this->bbcode_second_pass_quote('', '&')quot;3. The Prudhoe Bay oilfield lies under Alaska state land and is owned by the people of the state of Alaska. The royalty oil and taxes collected from the oilcos operating at Prudhoe have nothing to do with socialism or collectivism---the oilcos are private businesses and their taxes are part of CAPITALISM---the Alaska sovereign wealth fund is CAPITALIST to the core----the dividends paid to the sovereign wealth stock fund owners (i.e. Alaskans) are a fundamental part of CAPITALISM."

[HARM]

Plantagenet,

We can spend all day parsing words and dueling definitions, so I'll limit my response to a couple counterpoints:

1. You are conflating communism with democratic socialism. This, I might add, is a favorite tactic of the American far right, especially since the fall of Communism/Stalinism in the former USSR. The far right basically caricatures anything it considers faintly "leftist" or progressive as "socialist" in an attempt to shut down any political debate before it has even begun. They prefer to constrain everything into a false dichotomy of "us" ("real American" right-wing patriots) vs. them (Godless gun and Bible-confiscating gay-abortion-socialists). So, if you are in favor of unions, you're a communist. If you're concerned about growing povery/inequality, you're a communist. If you're concerned about the environment, you're a bleeding heart (and a Commie). If you "believe" in the actual age of the earth/universe, or the established-beyond-reasonable-doubt mechanism of evolution, you're a Commie. If you think women should be trusted with their own bodies, then clearly you're a communist, etc.

2. "you're fear being identified with "socialism". It's funny how the American far right has spent the last half century relentlessly trying to turn socialism into a dirty word and then mocks liberals for being afraid to use it. Despite the (very real) stigma of the word in this country, I am not afraid of the word or what it represents. On the contrary, it is your side that seems perpetually terrified of the word, to the extent you force an association between in and all sorts of other right-wing bogeymen, real or imagined: Islamic terrorism, gay marriage, unions, abortion, science, gun confiscation, loss of white privilege, multiculturalism, business regulation, progressive taxation, etc.

[Subjectivist]

$this->bbcode_second_pass_quote('pstarr', ' ')I doubt the problems in Michigan are a consequence of folks being too lazy or unimaginative to fract. It could be the previous resource-extraction boom (in steel, not oil like Alaska) came to no good.

[Plantagenet]

$this->bbcode_second_pass_quote('Subjectivist', '
')
Michigan had three extraction booms, first they came for the Copper, then the Lumber, and finally the Iron Ore.