More Food for Thought from Thomas Piketty

The key to power, in my mind, is controlling information, and the more money you have, the easier it is to control information.  See the Koch brothers spending on politics, Fox News, and the conservative talk shows.  Most of what goes on there is not an honest discussion of the facts, but carefully selected facts or outright lies to obscure the truth.  The point is, they don’t want any stink’in data to mess up their preceive reality.

In the economic world, Thomas Piketty points out that we depend too much on models especially complicated ones when the data may actually point out the reality and this translates to all political science, not just economics.  Kind of clarifies why Republicans are pushing a bill to stop funding of social science research.  From Matt Yglesias’s interview with Thomas Piketty:

Piketty does seem to attribute an almost magical power to empirical information when he tells me it’s “the lack of financial transparency” — rather than interest group politics, sincere normative disagreement, or human tribal instincts — that “makes it very difficult to have a quiet political conversation and democratic debate about these things.”

… “Math is fine. Math is very cool. But very often, they tend to push for more sophisticated math just to push off other people. It’s an easy way to have the appearance of scientificity. For a real mathematician or physicist, the math will not be terribly impressive but it’s enough to impress those economics departments that are less good at math and those social scientists who are less good at math.

I think math is useful, if you have a good ratio of facts to theory. But most of the time the economists do the opposite. There are incredibly sophisticated mathematical models with a very tiny empirical component.”

We have a real problem here, that economic inequality that is taken to extreme hurts our democracy and economy, and the data shows that is where we are heading.  If you live below the 90th percentile in earnings, you see this everyday.  But now we know.  The question is are we going to agree to the underlying truth and have a real discussion about how to fix it, or are we going to do what conservatives do, deny the data and never address the problem, maintaining the status quo.  That is what is really at stake here.

The Toadies that Run For Office Part II

As you watch Fox News, Sean Hannity, and most conservatives rally around Cliven Bundy, the cattle rancher/dead beat in Nevada, including the Republican Governor, because he was standing up to big bad government simply enforcing the legitimate laws all the rest of us have to follow, you know they are reacting based upon their ideological political correctness enforce by conservative talk shows. It has been determined that to be ideologically pure you have to support this ignorant moron and his gun toting friends to be the defender of liberty and justice. Wonder how stupid they feel after this Cliven Bundy utterance:

Now Cliven Bundy, the deadbeat rancher embraced by Rand Paul and other freedom lovers, has added some thoughts of his own. In an interview with the New York Times, Bundy — introducing the topic with the brace-yourself-for-awkwardness segue “I want to tell you one more thing I know about the Negro” — expounds:

They abort their young children, they put their young men in jail, because they never learned how to pick cotton. And I’ve often wondered, are they better off as slaves, picking cotton and having a family life and doing things, or are they better off under government subsidy? They didn’t get no more freedom. They got less freedom. (Jonathan Chait)

Just another example of how we elect toadies to office who follow the mob to get re-elected and why we can’t solve problems anymore.

My Pet Peeve: Political Feasibility

In a post, Matt Yglesias is interviewing Thomas Piketty of Captial in the Twenty First Century and political feasibility of possible solutions is discussed:

Piketty is unimpressed by arguments about political futility. A century ago, he says, the progressive income tax would have been regarded as an impossible pipe dream. And yet it happened. Not just in a Europe terrified by the Bolshevik Revolution, but in the United States as well.

“The Constitution of the US made it, in principle, impossible to have an income tax,” he observes, “and yet it happened.” The role of scholars, he thinks, should not be to prognosticate on the political viability of various proposals but simply to try to assess their merits.

Dead on. I am not interested in what politicos think will get passed, I am interested in what are our options. If we dismiss solutions because we feel that the lame brains in Washington won’t consider them, then we are not giving these ideas the light of day to make them politically feasible. It is called the optimal solution instead of always going for the suboptimal one. Another “no-Duh” moment from the French.

The Toadies That Run For Office

You know them. They probably are your representatives. Well I say that not counting my self in that number because the representatives that are elected where I live (locally) don’t represent one thing I believe in. But I get distracted. They are the people who believe what they have to believe to get elected. My local Congressional Representative was up here recently pandering to the 9/11 lunatics that claim the CIA did it.

Now you might think that is a good thing. After all you want your representative to, well represent you. But what if you live in fantasy land and what you believe is actually harmful to our way of life, wouldn’t you want your representative to disabuse you of these beliefs? Shouldn’t we live where our elected representatives teach us and lead us base upon fact and data instead of some ideological creed?

I am thinking of the spectacle of Rand Paul now embracing Ronald Reagan when he used to defame him. Rand Paul believes in no deficits (which is patently ludicrous. Name one business that does not borrow money to invest in its future). So in his early years he decried Saint Ronald’s massive debt run up. But that is not part of what the faithful believe about Saint Ronald anymore so now he has to blame it on a Democratic Congress.

One could spend a whole blog shooting down what the Right believes about Saint Ronald that is fictitious, but the real harm is that that is only the tip of the iceberg. I watched four candidates for North Carolina Senate all tell us that Global Warming does not exist. If you don’t believe that or at least say you do, don’t bother to run for office.

Once again they are dead wrong, but we now have a party that is based upon faith based thinking. Guns anyone? If you don’t believe that more guns will fix the violence with guns problem, just don’t apply. Data be damned. It worked well in Nevada where the armed conservatives demonstrated that the only laws you have to comply with are those you agree with. Hmm. I don’t think that is the implicit agreement of the governed in a democracy.

Sadly, we get the government we deserve when we elect people who believe what they believe because it gets them elected. Check the latest poll and no matter how outlandish or counter productive, that is what will secure our next election.

For my part, I would like to elect people like Elizabeth Warren or Bernie Sanders who I know have a good minds and can analyze a problem and educate me about it, a thinking representative. I don’t want a ideological stooge who will ensure both his ignorance and mine by only considering what is part of his/her limited reality. That is why getting out to vote this time is so important. We simply cannot continue to elect the lowest common denominators as our representatives.

Inequality just Continues to Grow

“The Federal Communications Commission will propose new rules that allow Internet service providers to offer a faster lane through which to send video and other content to consumers, as long as a content company is willing to pay for it, according to people briefed on the proposals.

The proposed rules are a complete turnaround for the F.C.C. on the subject of so-called net neutrality, the principle that Internet users should have equal ability to see any content they choose, and that no content providers should be discriminated against in providing their offerings to consumers.

The F.C.C.’s previous rules governing net neutrality were thrown out by a federal appeals court this year. The court said those rules had essentially treated Internet service providers as public utilities, which violated a previous F.C.C. ruling that Internet links were not to be governed by the same strict regulation as telephone or electric service.”

Be assured this means you will pay more for these services and it is just a short step to making really high speed internet only available to those willing to pay. The internet should be like a utility with all having equal access (and better infrastructure for better access), but like everything else, if you can afford it, well you have got great service, and if not, well you don’t count anyway. It sad to see the internet being turned into another measure of the economic inequality in this country.

The Best Country in the World

“After-tax middle-class incomes in Canada — substantially behind in 2000 — now appear to be higher than in the United States. The poor in much of Europe earn more than poor Americans.” New York Times (NYT).

“No country incarcerates a higher percentage of its population than the United States. At 716 per 100,000 people, according to the International Centre for Prison Studies, the U.S. tops every other nation in the world.” Huffington Post. Oh, we now incarcerate more people than were ever incarcerated in the Gulags of Russia.

The United States is now rated as having more economic inequality than any country in the world. In addition: “… A new study by economists Emmanuel Saez and Gabriel Zucman shows that the richest one percent of US households have almost doubled their share of the nation’s wealth since the 1960s. One percent of the country owns more than 40 percent of the wealth — and that share is rising. In contrast, the bottom 90 percent of the country owns less than 30 percent of the nation’s wealth.”

“There are 16.4 million American children living in poverty. That’s nearly one quarter (22.6 percent) of all of our children. More alarming is that the percentage of poor children has climbed by 4.5 percent since the start of the Great Recession in 2007. And poor means poor. For a family of three with one child under 18, the poverty line is $18,400.” Huffington Post. And we are cutting food stamps?

I could go on and on, but government is not working. This is not a Democrat problem but a Republican problem. If you doubt that, see the Ryan budget the house just passed to further increase wealth for the wealthy by cutting every thing that helps the rest of us. See any repair of infrastructure in there? Are you connecting the dots yet? Kind of reminds you of that song … slip sliding away.

Thomas Piketty in His Own Words

I am presently reading the book, but I am a slow reader so I found this interview by Chris Hayes with Thomas Piketty, and when Chris lets him, we get real insights into his historical perspective on our capitalist system:

By the way, the book is very readable and gives a real insight into our economic history. You know, that thing that Republicans do not want us to know, because knowledge is the biggest threat to their economic philosophy.

Bits and Pieces

There is an interesting piece about how Putin used sophisticated thuggery to take Crimea,

For its intervention in Crimea, the Russians used a so-called snap military exercise to distract attention and hide their preparations. Then specially trained troops, without identifying patches, moved quickly to secure key installations. Once the operation was underway, the Russian force cut telephone cables, jammed communications and used cyberwarfare to cut off the Ukrainian military forces on the peninsula.

What ought to worry the Crimean people is that this same sophistication will be employed to govern and control them. Be careful what you wish for.

I find it interesting how quickly Thomas Piketty’s book and the Gilens and Page study has hit the mainstream media (with the usual deniers from the conservative side). For my part, I think they hit on something we already knew at some basic level and this just brought it out into the open. Now the question is what do we do about it? From my vantage point, voting out conservatives is the first step because they represent no change, desperately hanging on to the status quo. Then we have to watch Democrats very closely.

In kind of an confirmation of these studies, you wonder how President Obama could pivot from the economy and jobs to debt, maintain the level of secrecy that is antithetical to democracy (drones, torture, surveillance), missed the mark on stimulus, and not really reformed the financial sector. The answer is that economic elites surround him and that is the echo chamber he lives in.

Being a user of Airbnb, HomeAway, and other sites that advertise rentals directly between property owners and people needing a place to stay on a vacation, I was intrigued to read that “regulators as well as some elected officials across the country are increasingly questioning the presumptions and tactics of these start-ups, especially the notion that laws do not apply to them.” For example in NYC, it is against the law to rent a place for less than 30 days and it is estimated that 60% of the rentals on these sites are violating this rule.

I guess my thought here is that we are living in a new sharing economy where this is both a way to find an affordable place to stay and be able to afford the property you own. Welcome to economic inequality and one of its affects. One home owner that rents out part of her home put it this way:

“Kimberly is an Airbnb host on the Lower East Side,” the memo says. “She has a chronic illness that prevents her from working.” Kimberly is quoted directly: “My husband and I spent countless nights wondering if and when we would lose our home, or if we would have to stop treatment to keep a roof over our heads.” She concludes, “Airbnb saved us.”

My thought would be that the economy is changing for many of us and the old rules can’t just be applied without killing the new way of doing things. Maybe there is a need for control in terms of safety, but I have not seen it. Maybe hotels are pressuring the regulatory agencies because of the competition. I think what we are seeing are businesses being created out of the necessity of the new economy. It would be patently stupid to apply old economy rules to innovation and change without thinking very carefully about what we are doing and not just protecting vested interests.

Simply in Complete Denial

In an op-ed piece in the NYT about how we can help families and deal with inequality, Judith Warner makes an argument that we should start by helping familites:

Since President Obama declared in his State of the Union address that fighting inequality was the “defining project of our generation,” Democrats and Republicans alike have seized upon the theme to connect with voters. Their dueling campaigns have, predictably enough, devolved into an extension of the futile partisan deadlock that characterizes our stillborn political debates on almost every issue.

Now Judith makes an excellent policy recommendation on how to help families better cope, but she misses the whole problem. We are not looking at “futile partisan deadlock”, we are looking at Republican obstruction.

Take a gander at Obamacare, which is the Republican plan for healthcare, or used to be until Democrats proposed it. Then Republicans are against it. Who, Judy, wants to cut funding for studying social science? They don’t want to know what works if it doesn’t agree with their ideology.

Who is against raising the minimum wage or equal pay for women? Please, this is not about a futile partisan deadlock, it is about Republicans obstructing anything that might hint a success for President Obama. You can make all the rational arguments you want that both sides should want this, the problem is not going to come from the Democrats.

Judith is part of the problem. As long as she maintains the fiction that both sides do it and not pointing blame where it belongs, she thinks she can appeal to both sides. It is tilting at windmills. Worse, it doesn’t start to assign blame so that the voters can see the reality of our government today, controlled by irrational conservatives that are trying to drag us back to the 19th century.

When we end the fiction of could the two sides just get along and understand that Republicans have no intention of ever getting along, then we will start to make progress by throwing these people out of office. Until then, nothing is going to change.

Oh and Judith, if you really wants these policies to succeed in the near term, then fight the fight locally like the minimum wage. There are still local governments that are acting rationally in the best interest of their citizens.

Footnote: In my previous post I opined that even with the Gilens and Page findings that the economic elite and interest groups really control our politics, we can still change it. While it is true that both Republicans and Democrats are held in sway by these groups, there is a very distinct difference. If you don’t believe that, see the Ryan Budget. If we want change, then we have to vote for people who are for change, not old policies that failed us. For the most part, that is the current Republican Party. The day we throw these people out of office is the day the United States starts moving forward again.

Economic Inequality Part ?

It is nice to know someone else (Bill Moyers) connected the dots on economist Thomas Piketty’s findings on rising oligarchy with political scientists Gilens and Page’s study on who really controls our politics (the rising oligarchy). Piketty found “that capitalism, left unchecked, subverts democracy by always and everywhere concentrating wealth at the tippy-top. That creates a class with so much economic power that they begin wielding tremendous political power, too. And then they use that political power to further increase their wealth, and then they use that wealth to further increase their political power, and so on” (VOX.COM).

The Gilens and Page study that found that “economic elites and organized interest groups play a substantial part in affecting public policy, but the general public has little or no independent influence.” Further they noted that “…the system has a substantial status quo bias. Thus when popular majorities favor the status quo, opposing a given policy change, they are likely to get their way; but when a majority – even a very large majority – of the public favors change, it is not likely to get what it wants.

Here is Bill Moyers interview with Paul Krugman on the Piketty book, and his connecting the dots moment at the end when he raises the findings of Gilens and Page::

As hard as it is to effect change according to the Gilens and Page study, I, like Paul Krugman, have not given up hope that eventually rational minds will prevail (when conservatives are finally put out of power). So if we could effect a solution, what would that look like? Well Thomas Piketty recommends a wealth tax. See the conservatives go ballistic? Stealing money from the job creators to give to the slackers? Well here is a thought courtesy of Matt Yglesias:  Raising taxes does not necessarily mean more tax revenue, it means changed behavior.  The cigarette tax was not to raise revenue, but to discourage smoking.  The same could be said for the carbon tax.  As Matt explains:

If you believe systematically lower CEO compensation packages [because of a CEO extravagant pay tax] would mean a mass withdrawal of talent from the business world and a collapse of American industry, then those smaller pay packages could be an economic disaster. But the more plausible theory is that systematically lower CEO compensation packages would mean systematically higher compensation spending elsewhere in the corporate structure. Either more frontline workers or better-paid ones. The new tax code would redistribute value inside the corporate structure without anyone actually paying the new sky-high taxes.

So instead of taking money from CEOs to pad welfare checks, what if high taxes caused more money to be spread out in the economy, creating more spending and better paying jobs?  It is a whole different way to look at taxes, not as revenue the state will fritter away, but as ways to create a more prolific economy.  Food for thought*.

*In a separate post by Matt he looked at a study of higher tax rates, that argued that these higher rates “could push talented individuals to eschew lucrative-but-socially-useless jobs in favor of more broadly beneficial careers in teaching and research.” Just a study based on models, but again food for thought, unless you are a conservative, and then perish the thought.