On Picketty
Here’s an article on Piketty’s book that seems less political than most, and more about analyzing the nitty gritty of what he says.
The New Neo
A blog about political change, among other things
Here’s an article on Piketty’s book that seems less political than most, and more about analyzing the nitty gritty of what he says.
“In perhaps the most revealing line of the book, the 42-year-old Piketty writes that since the age of 25, he has not left Paris, “except for a few brief trips.” ”
Piketty is much like our POTUS, he’s not a practical person with experience in the rough and tumble of the real world where most people have to work hard and make good decisions if they are to prosper; and sometimes they fail to prosper despite their efforts. The only equality that matters is equality under the rule of a just system of law. There can never be equality of outcome. There can never be equality when it comes to abilities. Even Jimmy Carter knew life is not fair.
The main idea behind capitalism is that people can put their savings into profitable businesses. Even if you aren’t creative enough to start a business, the development of mutual funds, pension funds, and now ETFs has provided a pathway for even the smallest investor to share in the growth of the economy. I was fortunate to be introduced to the concept in the 1950s when it was not very well known. The blueprint was this:
1. Save until you have six months living expenses in a savings account. (Bank, credit union, savings bonds, etc.)
2. Buy term life insurance instead of whole life and invest the difference.
3. Invest 10% of your income each month into well diversified mutual funds.
4. Stick with the plan because tincture of time (or the time value of money) and dollar cost averaging are what make the difference.
5. At around 55 (or nearing retirement) you should move to 50% safe income investments and then gradually reduce your market risk by 10% per decade.
6. Watch your investments closely and understand them.
I grew up poor. I was barely able to afford college when it was far, far cheaper than it is today. (Think $60 per semester for tuition. Books ran about $75/semester.) Board and room was the big expense, but you could work ( I waited tables, cleaned house, washed dishes, etc.) to earn most of that. Even with a college education my starting salary ($350.mo.) with an oil company was not going to make me rich. The only way for me to get rich was to follow the plan. I was not a genius entrepreneur (although I had some wonderful ideas 🙂 for businesses.) I was not in a field where I could easily get increases in salary. I had to live below my means and believe in the plan.
It was a long, often difficult journey, and I never did get rich, but according to the statistics, I’m better off than 80% of the population. I credit the magic of being able to share in the wondrous economic growth of our successful companies for being comfortable in my old age. Some of the progs or LIVs in my area think I’m a greedy capitalist. Well screw ’em! If I can do it, so can anyone else who puts their mind to it.
I can point to just about all my high school classmates (Class of 1950 – 29 students) and see that most of them did as well or better than me. I know they all had a good work ethic and followed plans similar to mine. Some of them started businesses that succeeded. They were more creative than me and I tip my hat to them for that. To me, our stories represent what capitalism offers to those on the bottom of the economic ladder, as most of us were when we started out.
It disturbs me that no one even talks about what our system offers to those who work hard and have a plan. Too many look at the spectacular cases of sudden wealth that have happened in the technology industry today and think that’s the way it’s supposed to be. Not that there’s anything wrong with spectacular technology success stories. Bill Gates has gotten very rich very fast, but he has also created hundreds of thousands of jobs, thousands of millionaires, and provided software solutions that have made our lives better. Oh, that we could have a new company with all the jobs and wealth of Microsoft spring up every year. Capitalism is GOOD! Ambition is GOOD! Central planning and a socialist economy are softer than out and out slavery, but amount to the same thing in the end.
I shan’t be reading Picketty’s book, having already read the Black Book of Communism.
The signal fact about communists (the ivory tower variety in particular) is that they don’t have the slightest idea how wealth is created.
They always, and only, think in terms of extraction.
This skews all their analyses. It’s also at the root of Malthus’s pessimism (vs. Condorcet’s optimism).
@ Beverly,
I’m not sure that’s true. The concept is simple to understand, and has been repeated endlessly by free marketeers for a long time.
More likely is that communists don’t care about wealth creation, but instead are focused on control and power for themselves. This is the position of all fascists/communists/statists.
I think communists understand perfectly well that capitalism is the most efficient economic system, but as Instapundit Glenn Reynolds says, “it provides insufficient opportunities for graft and corruption.”
I couldn’t get to the full article. It wanted me to register but I found another article tht should put Piketty’s “ideas” in their proper perspective:
http://www.nationalreview.com/article/376445/welcome-paradise-real-kevin-d-williamson
After Neo’s first post on Piketty, I added a comment that included a link to Tyler Cowen’s critique of Piketty’s book. After this post, I’ll double-down on the recommendation of Cowen’s review. He has more to say at his blog “Marginal Revolution,” and I think it’s worth reading.
In my earlier comment, I said that the adoration of Piketty’s book looks more like politics than economics. I don’t belive most of the enthusiasts have read the book, but it doesn’t matter much now, because Piketty has become little more than a tool in a class war between two parts of the educated classes.
The political class — including the main-stream media propagandists for the Democratic Party — are using the Piketty book as a tool to justify taking money from anyone who works in a private business that’s not state-approved. It’s straight-up envy and theft. The political class used the Occupy Wall Street people in the same way. Next year they’ll find something different.
mf, thanks for the link! Kevin D. Williamson is a national treasure!!! YAY!!
Our of curiosity, I read Piketty’s bio on fr.Wikipedia. It turns out that he grew up in Clichy, which in the 70s was firmly controlled by the left (and the far left, the PCF.) Furthur, his parents were very active in the trade union Lutte Ouvriere, which is proudly Trotskyist. Today he does not identify as belonging to the communist party (even the infamous banlieues rouges – the Paris suburbs controlled by the communists for nearly a century – barely exist any longer!) yet I can’t help but wondering how much his family influence has on his professional career, and why no-one mentions this.