Courtesy of Mish.
French economist Thomas Piketty, author of the surprise best-selling Capital in the 21st Century turned down France's top award, the Legion D'Honneur.
"I do not think it is the government's role to decide who is honourable", said Piketty.
Nobel Prize-winning economist Paul Krugman called it "the most important economics book of the year – and maybe of the decade".
Krugman likely says that because he believes in Piketty's socialist solutions to income inequality.
Thomas Piketty's Capital Review
Piketty's book is a massive 696-page slog. Fortunately, Harvard Business Review offers this synopsis: Piketty’s “Capital,” in a Lot Less than 696 Pages.
The argument. Capital (which by Piketty’s definition is pretty much the same thing as wealth) has tended over time to grow faster than the overall economy. Income from capital is invariably much less evenly distributed than labor income. Together these amount to a powerful force for increasing inequality.
The method. Piketty does not offer his own theory of what drives economic growth, or what the optimal ratio of capital to labor income might be. In fact, a recurring theme of his book is that the theory-first approach of modern economics is a dead-end.
The evidence. The richest source of data for the book is France, thanks to the country’s long tradition of excellent record-keeping and an estate tax that was enacted a couple of years after the 1789 Revolution. What the French numbers show is that the ratio of capital to income remained steady at about seven-to-one for centuries, plummeted around the start of World War I, and began recovering after World War II.
Piketty argues that the U.S. should consider a return to a “confiscatory” (his word) 80% top marginal tax rate even though it wouldn’t bring in much money (he basically agrees with Arthur Laffer on that), well, that provokes some thoughts, doesn’t it?
Everything You Need to Know
The Guardian offers an Everything You Need to Know synopsis of the surprise bestseller. I piece together some paragraphs out of order below to make rebuttals easier.
That capitalism is unfair has been said before. But it is the way Thomas Piketty says it – subtly but with relentless logic – that has sent rightwing economics into a frenzy, both here and in the US.
Piketty's argument is that, in an economy where the rate of return on capital outstrips the rate of growth, inherited wealth will always grow faster than earned wealth. So the fact that rich kids can swan aimlessly from gap year to internship to a job at father's bank/ministry/TV network – while the poor kids sweat into their barista uniforms – is not an accident: it is the system working normally.
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