I would suggest the best economists incorporate unpredictability into their economic forecasts. In fact, economics courses emphasize that the greatest factor in forecasting is unpredictable forces in the economy. That’s why the Federal Reserve and other entities tend to offer a spread of possibilities (we predict GDP will grow by 2-4% Q3) to account for their lack of psychic powers. It is an inexact, dismal science, but not entirely one of guesswork.
I’d say that research is mistaken for many reasons. I think the middle class dominates, as proven by the fact that the vast majority of federal spending is earmarked for the middle class, despite the fact that the tax burden on the middle class is shrinking more and more. The rich and the poor, by contrast, are paying more. The tax code is designed so that middle class families can take advantage of tons of tax breaks, many of which are means tested, and many of which the poor cannot take advantage of. A poor single person will almost always have tax liability. A married couple with a home and kids in college can make quite a bit of money by contrast, and pay no income taxes whatsoever.
The criminal laws are overwhelmingly designed to disadvantage the poor, few dispute this. And it’s not the rich who are the main beneficiary. It’s the middle class. The rich have security and tend to live far away from the poor people.
Then there’s occupational licensing laws, which the rich could care less about since they don’t want those jobs anyway(except for doctors and lawyers, who no one doubts the need for licensing for). Those laws keep the poor out while preserving a cartel in various occupations for middle class individuals.
The wealthy class and the middle class are in agreement on a lot of issues. As for the ruling class, that’s the government and its bureaucracy. They just want whatever will perpetuate their power.
I’ll quote Piketty from my Kindle copy of the book.
(The bolding is mine.)
It’s not just a matter of resentment, as you keep saying, and it’s not so obviously true that wealth disparity is not a problem in and of itself. Some wealth disparity, even relatively large disparities, may be necessary or even inevitable but there’s a limit to how much disparity is acceptable. As a larger and larger portion of the world’s capital becomes controlled by a small percentage of people, those people gain more and more power over the rest of the population. This is true even if overall wealth increases.
As time goes on, an imbalance between the rate of return on capital and the rate of growth of output and income also means that a larger and larger percentage of the extremely wealthy will have inherited that wealth rather than having earned it through hard work and innovation. This then leads to the situation where the majority of these wealthy and powerful people are heirs rather than innovators. So we could end up with what is essentially a monarchy of Paris Hilton’s and Donald Trump’s, where the most a hard worker and innovator can hope to achieve is a bonus check for his efforts and the possibilty of joining the elite is non-existent for the majority of the population. Maybe you find that acceptable. I don’t. Mankind has been fighting to move away from such societies, not towards them.
I don’t think that the real argument to be had over Piketty’s book is whether or not such inequality is a threat. It seems self-evident, at least to me, that it is, The real argument is whether or not he’s correct that inequalities in the control of capital will inevitably continue to grow without some kind of government intervention and, if so, what that intervention should be, if it’s even possible,
It’s self evident just so long as you don’t have to produce any real world examples of a wealthy democracy being undermined by inequality. It’s a hypothesis, nothing more.
As for the idea that most people will inherit their money rather than earn it, the business world is still creating new millionaires and billionaires at a pretty rapid pace. People are still earning their way into the elite. When that stops, then we can get concerned.
So, without a real world example proving otherwise, you contend that ANY level of inequality is not a threat? 95%? 100%? Do you contend that there’s no amount, no line whatsoever, that we should be wary of crossing?
I haven’t read very far into the book, but from what I can see, Piketty’s contention is that, WHEREVER that line is, unchecked capitalism will eventually cross it. I’m not convinced that he’s right about that, but I don’t need a real world example to understand that there is some level that’s a threat. The question here is whether or not unchecked capitalism will lead to that level. It may not. I don’t know. It may not even be possible to reach that level by any means. I just don’t know. But the question of whether or not such a level even exists seems, more than anything else, like a smokescreen from the right meant to deflect conversation away from the real question.
No, you are confusing a social class with an institutional elite. And both the social class in question and the institutional elite in question do not include the vast majority of civil servants.
I agree that there is a line. Countries with mass poverty and a few rich people are not stable. Obviously if we hit that Third World level of inequality, we’re going to have a big problem. Thing is, I don’t think capitalism leads that way. Sure, the inequality will lead there, but the ranks of the poor will remain stable and the standard of living of the middle class will continue to rise. So maybe by 2100 we’ll have a few trillionaires, a 12% poverty rate, and the median income will be $500,000/yr in today’s dollars. While on paper that’s a historically high rate of inequality, it’s not the kind of thing that will produce discontent.
A comedian once made a joke that we’ll never have a revolution because Americans can’t agree on a time for it. “Thursday, no that’s bad, my kid’s got soccer practice. Saturday, hell no, that’s when I hang out with my buds. Monday, that’s fine. Oh wait, I can’t, I promised the wife I’d take her to that nice restaurant.”
See, even with great amounts of inequality, as long as the median American enjoys a comfortable life he’s not going to risk it by supporting major changes to the status quo. And even if he does, his lifestyle gives him little incentive to bother. There’s always something more interesting to do.
The West is incredibly affluent by historical standards and in 100 years will only be more affluent. Even if the super rich get even super richer, that widespread affluence is going to keep people pretty fat and happy for the most part.
It won’t be the middle class leading the revolution. It will be the poor. Their lives are getting nothing but worse as the safety net continues to get shredded and the minimum wages stays low and increasingly pervasive media continue to pour in maddening images of how much better other people’s lives are than theirs.
Meanwhile, the lower middle class, which is always one paycheck away from joining the poor, will be a LOT more sympathetic towards the poor than you seem to think they are, because most of them have gone through periods of being poor. The upper middle class will of course take sides with the oligarchy, as will the bulk of the middle middle class, but by no means all of them.
Gonna be nasty, my friend, because with drones and a militarized police force, a lot of poor people will die. With any luck they’ll take down a few rich people with them, though I hardly expect that. Just hoping, if it comes to that. I’d really rather it didn’t but with so many people sharing your attitude, I rather think it will.
“Widespread affluence” is no guarantee of that; it is not at all hard to find large numbers of Americans who are not fat or happy. As Robert Reich put it, “Shaquille O’Neil and I have an average height of six feet.”
No, it is a diagnosis – of this democracy, which has been undermined by inequality in the sense that when the poor, middle and rich disagree, the rich almost always get their way despite their limited numbers, which is not a democratic outcome.
You know what happens when a 12% minority rises up? A massacre. Not that it will happen. Historically, the poor don’t organize unless there’s a guilty spoiled rich kid to organize them.
BrainGlutton, that argument has been made before, and it’s absolutely correct. The problem for making that work today is that the union brand pretty much destroyed itself because of corruption, bad choices, and failure to adapt to the realities of a global marketplace.
When it was unions fighting against the robber barons, it was one thing, but the unions became robber barons in their own right, and were far more likely to just murder people they didn’t like. People don’t like aristocrats, but what people really hate are thugs.