Sunday, January 4, 2015

Thomas Piketty's Double Standard Bullshit Book

Thanks to ZeroHedge for the links for me to verify and read the primary sources.

"Yo bruh, buy ma book, errone iz readin' it"

Well, if you haven't read Piketty's book, here's a pretty concise video recap without too much of the numbers.

For those that like words instead of videos, here it goes, even better and clearer (from the Havard Business Review, summarised by Mish Shedlock)
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?
Wow, okay great. Now I know more about this famous economist whose book I've been hearing so much of now. He must be really good, since his books are so popular!

So, where's this ironic double standard that I am talking about? Well, the FT headline goes:

Now, why is this a double standard? It is because his actions here are completely contradictory to his book.

So (paraphrasing from Mish), If the government should be able to decide just about everything that is important, like confiscatory taxes, big governments and supporting the "save the local bookstore" mentally.... the government cannot decide who to give a stupid award to?

Just because the individual rejects its (due to personal belief or whatever reason) and refuses to co-operate?

Whoa whoa whoa. I guess your whole book is now null since maybe, JUST MAYBE, the richest 1% and 10% are gonna tell you and just about any government that tells them about a wealth tax, to go have intercourse in other direction. "F*** OFF!*

Screw you Thomas Piketty, you steaming sack of double standard shit. Your 696 page book of BS is just nullified by what you said. Paul Krugman calls your book "the most important book of the year - or perhaps the decade". With that kind of endorsement, I don't know why your book isn't sold in the Children's Fiction section.

The problem about this stupid book is that it's solution is the solution that everyone wants to hear. Tax the super wealthy and give away their money. This is "Robin Hood Returns: 2015". Who doesn't love a good fairy tale eh? Especially giving from the rich and evil, and giving to the poor and pitiful. While that policy would definitely benefit my greedy, selfish individual needs, I strongly believe that it is definitely not sustainable and will never work.

If it has been working, explain this, France? Socialist state with high taxes, hey isn't this exactly what Tommy here is recommending? France, DO MORE FRANCE! Also I'm sure once the SuperTax is finally in effect, France is going to bounce all the way back up to full employment! /sarc

EDIT: I realized that I didn't put up my opinions on his book.

Yes, capital owners with more capital will have more capital.... if their capital grows. If we continue this path of ridiculous ZERO-RISK (QE, stimulus forever) asset inflation of all assets, then Tommy here is right. But it won't. Capital has risk, hence the word, Capital Loss and Capital Gains. Extrapolating current trends is not scientific, especially if it has not always been this way.

A commenter from ZH said this, and I think it is perfect.
"Anyone that talks about tax rates is spewing bullshit. One page of the tax code is the rates, 20,000 pages are the definition of income, care to guess in which of those two the inequality lies? " - ZH commenter, Seek
Rather than letting the rich "get away" with hiding INCOME (constant, less risky, hence, taxable) under CAPITAL GAINS (volatile, risky, hence, tax-free), we are focused on arbitrary numbers of the tax rate.

Example: In Singapore, collecting rent is classified as Income(taxable), while disposing your property is Captital Gains/Loss (tax-exempt).

I believe that Singapore has done a stellar and amazing job (Income Tax Act), differentiating between capital and income. Almost anything that is a real and serious sense that can be considered income is taxed (IRAS Taxable Income for individuals). On top of that, we have a very good and strong system of progressive income tax rates. I wonder if we will ever have progressive business tax rates, to stimulate and encourage smaller businesses. Just a fleeting thought random.

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