That doesn't mean that the gains for capital since the 70s are from housing. Only that the gains from the 40s are. It also doesn't address the industrial revolution's affect.
In an interview, Nobel prize-winning economist Joseph Stiglitz (who served under Bill Clinton) criticized Piketty [0] of overemphasizing the increase in concentration of wealth, and this was on the basis that the current increase in wealth stems from an increase in land value.
[0] https://www.salon.com/2015/01/02/joseph_stiglitz_thomas_pike...
As far as I can tell, the graph is based on an earlier graph from Pikettys paper:
http://piketty.pse.ens.fr/files/AlvaredoGarbintiPiketty2015....
Compare to Figure 5
Let's not imagine the unwanted effects and just bask in the idea of those kind of perfect societies.
Right now some country implement some inheritance tax, but that's the only time when wealth is actually measured and taxed and there are so many loopholes (trust funds, donations, …) to make this incredibly ineffective especially on the richest.
Pardon my french, but that's such bullshit. Everyone who doesn't like to pay taxes has a noble excuse like yours. Sometimes they oppose to taxes being used to fund the arts, even though it's such a minuscule slice of the total pie as to be barely visible. Other times it's something else that they feel is frivolous or opposed to by some principle or other. The thing is however, that the nature of public spending is such that there is always something which we as private citizens would prefer not to pay for, if given the choice.
People with a libertarian bend tend to think of tax money being spent inefficiently as simply being wasted. But money spent by the government doesn't just disappear after it has been spent. It ends back in the pockets of the citizens! In the worst case scenario, it is thus simply being redistributed. In the best case scenario, it buys society something valuable (universal healthcare, say, or public education) along the way.
Money doesn't disappear, but resources (labor, natural resources) do. Money is just a proxy for resources, so it is valid to say that money can be "wasted", even if it flows into the pockets of workers – for every unit of money spent, there is an opportunity cost.
> In the worst case scenario, it is thus simply being redistributed.
That is not the worst case scenario. The worst case scenario is that resources are used up with little or nothing constructive to show for it. I disagree with many libertarian opinions, but it is not unreasonable to worry about wasteful government spending.
Are they now? It used to be true in the east bloc countries when they were all communist, but it's not remotely true in today's Germany where OP lives.
Having experienced living in numerous countries i can safely say that taxes are often (not always) poorly spent in Europe
People say that, and I hear: Taxes are not spent the way I would spend them, if I were in power.
when i see public sector inefficiencies on the scale that they exist in Europe
Please be specific about which inefficiencies your are referring to.
European countries are doing very well on the list of riches countries in the world as measured in GDP per capita. That would be quite surprising if their large public sector really were so horribly inefficient.
What do GDP and government efficiency have to do with each other?
Regarding social welfare I don't know anywhere that's doing it well enough to be considered a success. We should be able to provide housing and food for 100% of the people 100% of the time. For the edge cases that fall through mental health care should be provided for as long as necessary.
Not to want to seem like a downer on Europe the things I think they do exceptionally well includes investing in education, while they are also OK on the healthcare front (personally I'm a huge fan of the NHS model and would prefer if it was more widely adopted).
Housing is badly managed as is support for cash strapped entrepreneurs. The taxes nearly broke us when we started the last business in Berlin. In Ireland there is (the last time I checked) a possibility of a 2 year tax hiatus for new businesses in certain circumstances. In general these kind of incentives could do wonders for entrepreneurialism and the potential knock-on upward mobility it can bring.
Over here we pay a lot and don't get nearly enough in return. The effect of this is a growing libertarian political scene.
I'm going to assume you are french, and invite you to come to Spain, where we have a flamboyant highspeed railroad service in which there's not a single line that covers costs (not even Madrid-Barcelona). And guess what, we keep throwing money to that thing.
As for "money not disappearing", you are falling for the "parable of the broken window". Wikipedia has a much better explanation for it.
Once you're done with that, I suggest you to look at how 10 years ago Spain redid all it's public walkways (that were mostly ok) to "improve the economy". It was a massive waste of resources.
What if you let go of the notion that public transportation must be profitable? I don't know anything about the railroad service of which you speak, but I find it incredible if the cost of running it is more than the value it creates (although I concede that it's possible in principle). Do you know what else most societies keep throwing taxpayer money at? Roads. Yet you don't find very many people having a hard time accepting that the cost of building roads exceeds the value created by doing so.
As for "money not disappearing", you are falling for the "parable of the broken window".
I don't know what you mean by this.
Wikipedia has a much better explanation for it.
I'm sure they do.
Once you're done with that
I have this principle which is that if you can't or won't make the argument, I'm not going to go elsewhere and read someone else make it for you.
The only time that wasn't true in the USA was before income started being taxed.
If you do the math, the only tax which is not destructive to working people is taxing commerce.
That's the way the US federal government was funded when free enterprise was more available to a greaater percentage of citizens. Switching over to income taxes shifted the burden dramatically from the powerful to the relatively powerless. What more effectie way was there at the time to keep down the first freeborn decendandts of slaves after bondage ended?
The most prominent feature of taxing income is its huge damping effect on upward mobility.
That's OK, the ones who instituted income tax to begin with did so because as far as they were concerned enough citizens had moved up already, especially from the very bottom.
That's the most important consequence.
This is by design.
It's probably best to try and look beyond conventional wisdom when invoking caca del toro.
You are talking about private property. Personal property is distinct from private property.
That's OK, we can use CRISPR tech to solve that problem.
Brave New World in 3.. 2.. 1..
Keep everything as is, but don't allow inheritance, or cap it at some number.
And that's something advantaged people don't like to think about when they use the meritocratic word: most of them benefited from huge advantages by being born in the right family. Or even just by being born in the right country.
Nowadays you benefit from your inheritance when you are established and don't really need it anymore. What really helped you was the 100k-1 million 0% interest loan with no problem if you don't pay it back you got during your 20s from your parents. Or just knowing you could be attending a good college and knowing the most important you have to get out of there is the right network of people.
https://news.stanford.edu/news/2013/september/toddler-langua... for an example of what having the right parents can help a long time before inheriting their property.
What is better, to give $100K in wealth to everyone, from idiots to geniuses, or concentrate our efforts on those that have more chance to succeed?
If you are going to go that route a better measure would be how much upwards mobility someones parents have demonstrated proportional to their starting point.
Of course that still suffers from a number of confounding factors (e.g. we don't know how much is down to luck)
If you are just trying to promote success, then it stands to reason to reward success of the parents, incase some of those confounding factors are hiding actual fitness. After all, if the null hypothesis is true, you aren't losing anything by promoting some people over others, if they are all equality capable, anyway.
If you consider that there is no constant landscape, it's always changing and always an unknown, the best option is to try a plethora of different ideas, hoping some will succeed.
It's more like fighting a war in an unknown battlefield. If you play it just one way, you are more likely to lose than if you try many different strategies at once.
The ones that succeed will be self-sustaining, for as long as they are successful, anyway, and gain you enough ground to compensate for the strategies that didn't work.
If this wasn't true, nature would only have produced one single organism rather than a billion or more.
If we don't vary the amount of support people get, then we won't be able to take advantage of situations where more support (or less) would result in greater success.
And given that everything is constantly changing, there is no way to find a perfect level of opportunity to give to people.
So, a system that provides a varying level of support spread out against the population will do better nearly all of the time than one that provides an equal amount to everyone.
As quoted from "The Concise Oxford Dictionary of Politics":
Part of the difficulty in establishing sensible and consistent usage is that commitment to the biology of natural selection and to 'survival of the fittest' entailed nothing uniform either for sociological method or for political doctrine. A 'social Darwinist' could just as well be a defender of laissez-faire as a defender of state socialism, just as much an imperialist as a domestic eugenist.
Can you explain further?
As far as removal of private property, I don't think I like the living conditions in Venezuela, Cuba, or China very much, thanks. Again, nobody cares about property better than its owner, someone with a vested interest in maintaining it.
Someone who got a good middle class start, went into the right career, and had everything work out pretty well (no major financial misfortune or an injury or sick family member) while saving responsibly, can become a millionaire in a few decades today. They can probably afford a nice house, which their kids can carve up to have their own nice middle class start.
This group of people is still insanely privileged but it is nothing on the obnoxious levels of real inherited wealth in the upper crust.
What's different today is that inflation and high taxes have wrecked the middle class. The truly rich are the $100M and billionaire types whose wealth has run away from the rest of the people. Almost none of the truly wealthy are that way because they were smart (merit) only a few are. The rest . got rich either because they were lucky or because of some angle they could exploit such as favorable connections or regulatory capture. Above them, Old Money rules the world by at least one order of magnitude.
This doesn't explain everyone in your category, though, so a portion suck at saving.
[1] https://www.forbes.com/sites/timworstall/2011/12/16/well-of-...
https://www.reddit.com/r/TrueReddit/comments/1v4t18/it_is_ex...
The 57% figure is much more illustrative, in large part because it conveys an absolute capability which people can lose or acquire.
It would be pretty weird to have <$500 in checking at the same time as 5-6 figures in retirement + home equity, but possible. It helps that 401k is a payroll deduction and there's really no bargaining with yourself on whether to pay the mortgage this month (whereas it's easy to splurge instead of saving extra cash).
You can also loan against 401k (though there are limits, but if you have it for a while loaning $500 would not be a problem, though again fees could make it a bad deal). Advantage is that while you lose the growth for the time of the loan, you are paying interest to yourself, not somebody else.
Yes. Low-paying jobs at Wal-mart and Lowes and some gas stations offer a 401k. The contributions are tiny because the checks are tiny but the company usually contributes as well. These folks aren't as likely to have access to credit.
I'll put this as well: If you are looking to take $500 from your 401k outside of those groups, I'm gonna guess things have gone horribly wrong. Getting a new credit card might be a bit tough because your credit is probably already showing the hurt.
> If you are looking to take $500 from your 401k outside of those groups, I'm gonna guess things have gone horribly wrong
Yes, probably, but the question was is it possible, when the things go horribly wrong. I still think if you have 401k that should be possible.
A median-income household is unlikely to own a median-price house for a reason very similar to the reason they are unlikely to own a median priced jet, because home ownership isn't uniformly distributed across income levels, as low income households are more likely than high income households to be renters, and high income households more likely to be homeowners (and to own multiple homes.)
If a median-income household owns a home, it is likely to be a singificantly-below-median-value home.
This shouldn't gel well with someone who values meritocracy/social mobility.
If millionaire parents are only twice as likely to have millionaire children I would be surprised.
Upbringing is important and I think children of millionaires are more likely to develop healthy spending habits.
These two facts only contradict one another if you have an implicit belief that "fair" is "equal".
And no, I was not mixing up anything, I was pointing out that you were merely confirming what the comment said. That you disagree with the definitions used does not change that, given that it was clear which definitions were used, as you clearly understood yourself what was meant.
It seems that the graphs in this tweet are another confirmation of Piketty's observation.