Monday, March 24, 2014


Hi, I'm back. Thanks, Tom and Crank, for skewering a few idiots while I was away.

Today, Paul Krugman praises the dire warnings in Thomas Piketty's new book, Capitalism in the Twenty-First Century:
[Piketty] makes a powerful case that we're on the way back to "patrimonial capitalism," in which the commanding heights of the economy are dominated not just by wealth, but also by inherited wealth, in which birth matters more than effort and talent.

To be sure, Mr. Piketty concedes that we aren't there yet. So far, the rise of America's 1 percent has mainly been driven by executive salaries and bonuses rather than income from investments, let alone inherited wealth. But six of the 10 wealthiest Americans are already heirs rather than self-made entrepreneurs, and the children of today's economic elite start from a position of immense privilege. As Mr. Piketty notes, "the risk of a drift toward oligarchy is real and gives little reason for optimism."
Republicans give more and more to the rich every chance they get, of course, and, needless to say, they're not finished:
... when Republicans retook one house of Congress [in 2010], they promptly came up with a plan -- Representative Paul Ryan's "road map" -- calling for the elimination of taxes on interest, dividends, capital gains and estates. Under this plan, someone living solely off inherited wealth would have owed no federal taxes at all.
And, of course, the man regarded by some as the GOP's presidential front-runner has a very similar plan -- for which he's getting praise among people who really ought to prefer meritocrats to heirs:
SAN FRANCISCO -- In a ballroom at the Olympic Club, a grand, early-20th-century building at the foot of Nob Hill, Senator Rand Paul, Republican of Kentucky, pitched a gathering of venture capitalists last week in an effort to show them that he may be the next big thing....

The senator last week talked up his plan for a 17 percent flat tax, a hit with the high-earning crowd.
Paul's flat-tax plan doesn't just drastically reduce progressivity, and thus transfer more money to the already wealthy. Paul's plan, like the Ryan plan, also eliminates all federal taxes on capital gains, dividends, and other forms of investment income. And it eliminates the Department of Education. Paul's various budget plans over the years have contained massive cuts to pretty much every program that helps the non-wealthy.

So what the rich Rand Paul fans in Silicon Valley favor is an economic system that makes it harder and harder for America to produce precisely the sorts of ventures that venture capitalists capitalize. If America's schools are underfunded and the middle class is narrowed by the slashing of government programs, then fewer and fewer young Americans are going to be able to emerge from childhood in any kind of position to generate the ideas that make fortunes. Every kid who goes to primary and grammar schools that used to work but will now be in a state of deterioration is lost. Every kid who once would have been able to work out college financing but now can't is lost. Every kid whose family's savings get wiped out by the cost of illnesses formerly borne in part by Medicare and Medicaid is lost. And meanwhile, the heirs of fortunes keep more and more of those fortunes.

That's what's Rand's fans in the Valley want, I guess -- less and less economic dynamism, less and less churn. They made their fortunes already from "disruptive" new ideas; now, I guess, they'll just sit on what they have, and be happy if there's no more disrupting at all. Right?


Victor said...

Unregulated Capitalism is an incurable disease, which will eventually kill the body politic.

And it's sick enough already.

Victor said...

Oh, and welcome back, Steve!

Carol Ann said...