Monday, October 20, 2014

Will Americans Ever Vote for a Far-Reaching Wealth Tax?

 Here is a link to my piece on inequality that was published today on the Guardian Economics Blog
What Thomas Piketty has shown us, is that since 1980, it is only the rich and the very rich who have benefited from growth, writes Roger Farmer
But there will come a time when the average American realises that the dream that his parents aspired to is no longer within his reach. Photograph: Peter Hundert/ Peter Hundert/cultura/Corbis


  1. A lot of neo-liberals and applied mathematicians with a fanatical believe in the equilibrating properties of markets say that global inequality is falling, and rising inequality within advanced countries is a natural consequence of a dynamic adjustment to a new equilibrium. All will emerge in the long-run according to Holy Unanswerable Law of Comparative Advantage in a win-win outcome. The fact there might be winners and losers from such a process, as pointed out by Marx and many others is reactionary and "unscientific". The fact also that the long run does not exist and steady - states are an artificial construct that defies basic historical common-sense does not enter the discussion either.

    A few places have pointed out that understanding global inequality is a complicated question and have been examining this for decades - most notably places like SOAS and other places at the fringe of the economics discipline. It is part of a bigger question in development studies about how emerging markets in Asia moved from the periphery to core but Africa and the Middle East did not and more generally: why are some countries rich, others poor.

    The movement of China, through its sheer size as a proportion of the world's has population as certainly lifted a lot of people out of relative poverty and raised average worldwide earnings, giving the picture that inequality worldwide is falling. But in many ways the gap between the wealthiest and poorest countries has grown, with the political, economic and social conditions in much of Africa and Middle East appearing to be going from bad to worse and being further left behind. Human security issues, such as Ebola, and Islamic Fundamentalism are not totally unrelated phenomenon to the fact that these are failed states. It matters for all of us.

    The answers to these questions are not through mathematical gimmick or theoretical musing. It is through widely and deeply informed analysis of social, political and historical and other such issues.

    Piketty's book was the product of an extensive empirical investigation which in itself was a major accomplishment. But if it leads to a much greater engagement with accumulated knowledge outside the discipline that liberates it from questionable foundations, then it will most certainly be a game-changer.

  2. I agree with pretty much all of this. Thanks for your comments.

  3. As as an expat Scot living in London, it seemed to me a lot of the debate in the Scottish Referendum was about the the issues democracy and who runs 'our' affairs, which you raise. Much of the reporting of course focused on the adversarial Salmond vs Cameron/Darling/Brown/whoever.
    The first tax raising act of Holyrood, after the referendum, was a property transaction tax, not directly on wealth, but certainly redistributive. Maybe Smith's nation still has a contribution to make to the economic debate.

    1. The Scottish Enlightenment was a remarkable achievement and you are right, Smith's nation still has much to contribute. Thanks for sharing your thoughts.


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