Thomas Piketty Is A Darwinian Shill

The new economics book everyone is talking about is Thomas Piketty’s Capital in the 21st Century. (>>RECENZJA) Piketty made his name a few years ago by coining the term the “top 1%.” Now in this volume of 700 pages, he makes the case that the market economy so conduces to inequality that the only corrective is wealth taxes coupled with a steeply progressive income tax.

Piketty praises the United States for being the innovator in progressive taxation. He has a point. The income tax in the United States, birthed in 1913, had a top rate of 77% in 1918, and after a respite in the 1920 through 1931, had top rates of 63%-79% in the 1930s, upwards of 94% in the 1940s, 91% throughout the 1950s, and 70% up until Ronald Reagan in 1981. Today we just about touch 40%.

The golden age of taxing high earners, “1930-1975” by Piketty’s reckoning, accompanied the only compression of inequality in the entire era inaugurated by the industrial revolution centuries ago. Absent high taxes on the rich and high earners, Piketty argues, the record shows that inequality under the aegis of “capitalism” has always been massive. And that kind of inequality, if sustained, is inimical to democracy and the general flourishing of society.

Piketty drops Karl Marx’s name over and over again in this book. Enough to make you think that he’s hiding something. Such as the possibility that he is shilling for Charles Darwin.

Darwin argued, back in the 19th century (just when Marx was writing), that biological species do amazing things to adapt to inhospitable circumstances in order to survive and then prevail. “Social Darwinism” arose to describe how the same processes affect human institutions and affairs.

How does this apply to government?

One of the deadliest threats with which government has ever had to contend, over the entire pageant of human history, was the immense wealth and mass affluence generated by the industrial revolution. The usual metrics point to the exponential growth of goods and services from 1750 until 1914 if not 1929.

Exponential growth of what we call the private or the “real” sector of the economy—everything that is not government—means that government also has to grow exponentially in order even to be detectable. Moreover, one can ask: if exponential real-sector growth occurs over the long run, what possible need could civilization have for government?

By the latter portion of the 19th century, when population was rising at a historic rate, yet nowhere near the rate of economic growth—a trend which had been holding for a century—it became reasonable to consider that the further advance of the industrial revolution would eliminate any kind of justification of government. If there was inequality—fortunes blown on overpriced art, parties, mansions, and lame heirs—it would prove deadly to government if society worked out this problem on its own.

Government was on notice: it had to break the momentum of the industrial revolution, as well as compromise the private sector’s ability to solve its own problems, or else face mortality.

World War I was a keen effort to lure the masses away from their pursuits in the real sector to pursuits in the government sector, which is to say trench warfare. In the offing, the real sector took a big hit (economic production in France dropped by fully a third from 1914 to 1918).

But it remains the Great Depression that has proven the best thing that has ever happened to government in modern times. To this day, memory of the 1930s is still there in the global psyche, convincing people that the market cannot go on unchecked, that government has to be nice and big in order for there to be prosperity and economic justice.

Cui bono—who benefited—from the Great Depression? Government did. Therefore one should ask, did government procure it? Well, yes,says the most advanced thinking. The monetary, tax, regulatory, spending, and trade-restriction powers were all jacked up as the Great Contraction got going 1929-33. Signals got mixed, “capitalism” got the blame, and we haven’t been able to imagine life without government since.

As he accepted the Nobel Prize in 1999, economist Robbert Mundell said, “The deflation of the 1930s has to be seen, not as a unique ‘crisis of capitalism,’ as the Marxists were prone to say, but as a continuation of a pattern that had appeared with considerable predictability before—whenever countries [read: governments] shift onto or return to a monetary standard.” And then this: “Had the price of gold been raised in the late 1920s, or, alternatively, had the major central banks pursued policies of price stability…there would have been no Great Depression, no Nazi revolution and no World War II.”

Interesting. Government could have pursued policies that would have averted the government-engorging events of the 1930s and 1940s. But why would it do that in the face of a real sector with a record of exponential growth? It would have been writing its own death sentence.

Public choice economics has been teaching for half a century now, and care of two Nobel laureates (James Buchanan and Elinor Ostrom, who unaccountably rate no mentions in Piketty’s book), that government’s motives are lower than those of the actors in the real-sector economy. This is so by definition. If an industrial revolution is going on, tossing off abundance like nobody’s business, and you seek out a coercive alternative, something about you is weird and wrong.

The 19th century—Karl Marx’s time—was that of the exponentially-growing economy. The 20th century was that of the government’s wily attempts to regain relevance, at the expense of the fantastic real economy, with world wars and other hideous things thrown in for good measure. We entered the 20thcentury wondering if government really had a purpose, and in the 21st century we are sure it does. Now Thomas Piketty wants to aggrandize the non-real sector with fat taxation.

These are the rules of the jungle—or more properly, the scam of the blob-parasite that’s trying to get by and ruin things in an otherwise wonderful world. Clearheaded Darwinian animals would just expunge this thing and be done with the threat. The challenge of the 21st century will be to see if we have the courage and the foresight—for we certainly have the means—to permit government to expire.

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