Share on Google Plus Share on Twitter 12 Share on Facebook Share on LinkedIn Share on PInterest Share on Fark! Share on Reddit Share on StumbleUpon Tell A Friend (12 Shares)  
Printer Friendly Page Save As Favorite View Favorites View Stats   5 comments

OpEdNews Op Eds

Piketty Is Rickety On Government Complicity

By (about the author)     Permalink       (Page 1 of 6 pages)
Related Topic(s): ; ; ; ; ; ; ; ; , Add Tags Add to My Group(s)

Must Read 1   Well Said 1   Supported 1  
View Ratings | Rate It

opednews.com Headlined to H2 4/27/14

- Advertisement -

See original here


Piketty's immaculate research establishes that the American dream -- and more broadly, the egalitarian promise of Western-forbidden capitalism -- does not, and maybe cannot, deliver on its promises.
(image by Photo: Ed Alcock for the Observer)
  DMCA

Bad Government and Central Bank Policy Are the MAIN CAUSE of Runaway Inequality

French economist Thomas Piketty's book on inequality -- Capital in the Twenty-First Century -- has gone completely viral.

Mainstream economists like Paul Krugman and Joseph Stiglitz endorse it. So does Economist magazine. The Financial Times and New York magazine both call him a "rock star economist."

Slate notes:

"While recently passing through D.C., he took a little time to meet with Treasury Secretary Jack Lew, the Council of Economic Advisers, and the IMF. Even Morning Joe, never exactly on the leading edge of ideas journalism, ran a segment about Capital Tuesday morning."

Is Piketty right or wrong about inequality, its causes and the prescription for addressing inequality?

- Advertisement -

Piketty Is Right about Inequality

We noted in 2010 that extreme inequality helped cause the Great Depression ... and the 2008 financial crisis.  We noted in 2011 that inequality helped cause the fall of the Roman Empire.

In a few short years, mainstream economists have gone from assuming that inequality doesn't matter, to realizing that runaway inequality cripples the economy. Pikettey correctly notes that inequality is now the worst in world history ... and will only get worse.

Asset Prices Rise Faster than Wages

Piketty argues that the main cause for inequality is that the rate of return on capital -- land, natural resources, stocks, bonds and other assets -- is far higher than the growth rate of the economy:


Chart, Piketty -- R versus G
(image by
Washington's Blog)   DMCA
- Advertisement -

Because the growth rate is much slower than the rate of profit from holding capital assets, the asset-holders' wealth increases much faster than the wealth of workers. In other words, working stiffs can't keep up with those who make their money from investing in (and seeking rent from) land, stocks, bonds and other assets.

Piketty -- a rigorous data researcher -- is probably right that this is one of the main causes of inequality.

Government and Central Bank Policy Is What Is Making Assets Soar and the Economy Sink

But Piketty underplays the fact that bad government and central bank policy have greatly widened the gap between growth rate. After all, Fed chairman Bernanke, Treasury Secretary Geithner and chief economist Summer's entire strategy was to artificially prop up asset prices -- including the stock market -- and see thisthisthis and this.

At the same time, government policy has harmed the general economycaused unemployment and hurt the average American. Indeed, real wages have actually plummeted since 1969, and most of the new jobs that have been created are part times jobs with no benefit. In other words, bad government and central bank policy have made the rate of return on capital much higher ... but lowered wages. As such, bad policy is the core cause of the recent increase in inequality.

Nobel economist Joseph Stiglitz said in 2009 that the government's toxic asset plan -- a scheme to inflate the value of assets held by banks -- "amounts to robbery of the American people."

Bailouts Feather the Nests of the Fatcats, While Doing Nothing for the Average American

The American government's top official in charge of the bank bailouts,Neil M. Barofsky writes:

Next Page  1  |  2  |  3  |  4  |  5  |  6

 

http://www.washingtonsblog.com/

Washington's Blog strives to provide real-time, well-researched and actionable information. We have an insatiable curiosity for new discoveries, new information and new insights. Despite our passion for what's new, there are themes that we keep (more...)
 

Share on Google Plus Submit to Twitter Add this Page to Facebook! Share on LinkedIn Pin It! Add this Page to Fark! Submit to Reddit Submit to Stumble Upon


Go To Commenting

The views expressed in this article are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.

Writers Guidelines

Contact Author Contact Editor View Authors' Articles
- Advertisement -

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Guess Where These Beautiful Pictures Were Taken "

Roundup In 75% of Air and Water Sampled -- Causes Kidney Failure

The REAL Reason U.S. Targets Whistleblowers

NSA Spokesman Accidentally Admits that the Government Is Spying On Virtually All Americans

Will the Peasants Go Medieval On Bankers?

Top Economists Told Obama that Economic Recovery Required a Reduction In Private Debt

Comments

The time limit for entering new comments on this article has expired.

This limit can be removed. Our paid membership program is designed to give you many benefits, such as removing this time limit. To learn more, please click here.

Comments: Expand   Shrink   Hide  
3 people are discussing this page, with 5 comments
To view all comments:
Expand Comments
(Or you can set your preferences to show all comments, always)

Fantastic article!  And with enough links to ... by Scott Baker on Monday, Apr 28, 2014 at 2:34:02 AM
Martin Wolf and Bill Still comments that the Centr... by Scott Baker on Monday, Apr 28, 2014 at 1:12:21 PM
We cannot fault Piketty for missing a few things; ... by Larry Butler on Tuesday, Apr 29, 2014 at 4:27:52 PM
It's more than a few things.  See this 10-min... by Scott Baker on Wednesday, Apr 30, 2014 at 3:54:20 AM
Truly excellent article. Needs to be extensively q... by Amy Fried, Ph.D. on Thursday, May 1, 2014 at 4:16:03 PM