Business Insider on New Star Piketty, Old Star H. George
|May 22, 2014||Posted by Staff under Good Press|
This 2014 excerpt of Business Insider, Apr 21, is by Rob Wile, interviewing Mac Robertson, an independent portfolio manager and macro strategist who critiqued Thomas Piketty’s new book, Capitalism in the 21st Century.
BI: You say Piketty erred in trying to compare nations’ outcomes. What did you mean?
MR: Nation states, as far as macro economics, are really a fiction. The real aggregations are among hegemonic powers which set economic policy for their group or are a constantly morphing alliances of regions that transcend national borders.
And currently there is only one true hegemon which is the USA, but regional hegemons have defining capability if the USA has benign indifference in a certain region. For example Brazil has much clout in South America now. This is always a fact of life now and the usefulness of examining many nations hasn’t really been useful since Metternich.
What this means is there is little relevancy or usefulness in comparing Italy in the 20th century to the USA, for example.
BI: You said you preferred Henry George’s analysis of income distributions. Who was he and what did he say?
MR: Henry George was akin to Keynes and also Locke. The common denominator is one class of folks are “rentiers” who only seek a low risk return on their assets — usually inherited. That income is “rent.” In George’s time that was, for the most part, real rent on land leases.
George proposed that all funding of the public purse would be a tax on rent. Keynes went further and proposed that not only would rentiers be disproportionately taxed, but their ” euthanasia” should be sought. George would propose that inequality between rentiers’ capital accumulation and income of consumers and entrepreneurs is the only inequality to seek reducing or eliminating. Keynes agrees, so do I.
To not differentiate this income type invites disaster. Why would you tax a Bill Gates midstride? It would be very destructive. Yet Bill Gates’ income explains much of the income inequality. But would taxing late-stage Buffett be good? Perhaps. Certainly to tax third-generation rentiers and forcing the money back into the hands of future Bill Gateses, perhaps by funding universal education to promote future Bill Gateses, is good.
Ed. Notes: Ironically, Piketty would probably also agree with Henry George if the conversation took that direction and he could use his own terms.
See 10 more reviews of Piketty.