imc indymedia

Los Angeles Indymedia : Activist News

white themeblack themered themetheme help
About Us Contact Us Calendar Publish RSS
latest news
best of news




A-Infos Radio

Indymedia On Air

Dope-X-Resistance-LA List


IMC Network:

Original Cities africa: ambazonia canarias estrecho / madiaq kenya nigeria south africa canada: hamilton london, ontario maritimes montreal ontario ottawa quebec thunder bay vancouver victoria windsor winnipeg east asia: burma jakarta japan korea manila qc europe: abruzzo alacant andorra antwerpen armenia athens austria barcelona belarus belgium belgrade bristol brussels bulgaria calabria croatia cyprus emilia-romagna estrecho / madiaq euskal herria galiza germany grenoble hungary ireland istanbul italy la plana liege liguria lille linksunten lombardia london madrid malta marseille nantes napoli netherlands nice northern england norway oost-vlaanderen paris/Île-de-france patras piemonte poland portugal roma romania russia saint-petersburg scotland sverige switzerland thessaloniki torun toscana toulouse ukraine united kingdom valencia latin america: argentina bolivia chiapas chile chile sur cmi brasil colombia ecuador mexico peru puerto rico qollasuyu rosario santiago tijuana uruguay valparaiso venezuela venezuela oceania: adelaide aotearoa brisbane burma darwin jakarta manila melbourne perth qc sydney south asia: india mumbai united states: arizona arkansas asheville atlanta austin baltimore big muddy binghamton boston buffalo charlottesville chicago cleveland colorado columbus dc hawaii houston hudson mohawk kansas city la madison maine miami michigan milwaukee minneapolis/st. paul new hampshire new jersey new mexico new orleans north carolina north texas nyc oklahoma philadelphia pittsburgh portland richmond rochester rogue valley saint louis san diego san francisco san francisco bay area santa barbara santa cruz, ca sarasota seattle tampa bay tennessee urbana-champaign vermont western mass worcester west asia: armenia beirut israel palestine process: fbi/legal updates mailing lists process & imc docs tech volunteer projects: print radio satellite tv video regions: oceania united states topics: biotech

Surviving Cities africa: canada: quebec east asia: japan europe: athens barcelona belgium bristol brussels cyprus germany grenoble ireland istanbul lille linksunten nantes netherlands norway portugal united kingdom latin america: argentina cmi brasil rosario oceania: aotearoa united states: austin big muddy binghamton boston chicago columbus la michigan nyc portland rochester saint louis san diego san francisco bay area santa cruz, ca tennessee urbana-champaign worcester west asia: palestine process: fbi/legal updates process & imc docs projects: radio satellite tv
printable version - js reader version - view hidden posts - tags and related articles

Why a Global Wealth Tax Reduces Inequality

by Thomas Piketty and Hagen Kramer Thursday, Sep. 25, 2014 at 5:51 AM

The distribution of income and assets is one of the most controversial themes today. History teaches us that economic forces press in different directions - either to more equality or away from equality. Which will prevail depends on what political decisions we make.


By Thomas Piketty

[This article published on July 3, 2014 is translated from the German on the Internet, The French economist’s 650-page book “Capital in the 21st Century” has been a No.1 bestseller in the US.]

The distribution of incomes and assets is one of the most controversial themes today. History teaches us that economic forces press in different directions – either to more equality or away from equality. Which will prevail depends on what political decisions we make.

The US is an illustrative example. The US was understood as the antithesis to the patrimonial societies of old Europe. Alexis de Tocqueville, a historian in the 19th century, saw the US as a place where land and property were so abundant that houses were affordable to everyone and a democracy could develop. Up to the First World War, the concentration of assets in the hands of the rich in the US was less extreme than in Europe. In the 20th century, this situation was reversed.


Between 1914 and 1945, asset inequalities in Europe were practically wiped out through war, inflation, nationalization and taxation. Afterwards European countries built institutions that are more structurally egalitarian and inclusive than those in the US – despite all their weaknesses.

Ironically many of these institutions were inspired by the US. From the 1930s to the early 1980s, Great Britain maintained a balanced income distribution through high taxes on obscenely high incomes. This very progressive income tax was really a very American invention – arising in the inter-war period, a time when the US resolved to avoid the extreme inequalities of European class societies. This American experiment with high taxes did not harm economic growth. Economic growth was higher at that time than since the 1980s. This idea deserves to be revived – in that country where it first prevailed.

The US was also the first country where across the board debts for everyone arose and nearly complete literacy was achieved – at least among white men. Europe needed almost 100 years for that achievement. However Europe is now much more inclusive. Many of the best worldwide universities are found in the US although Europe successfully created more respectable medium-level universities. According to the Shanghai ranking, 53 of the best 100 universities are in the US and 31 in Europe. Still 202 of the best 500 universities are in Europe while 150 are in the US.


Whether in France, the US or elsewhere – the rhetoric of equal opportunities rarely has anything to do with the facts. Its goal is often the justification of existing inequalities. Access to US universities – once one of the most open in the world – is very unequal. Creating university systems that really unite efficiency and equal opportunities is one of the greatest challenges facing all countries.

Mass education is important but does not guarantee the fair distribution of incomes and assets. Income inequality in the US has become more critical since the 1980s and reflects above all the enormous incomes at the top. Why is that? Did the skills of managers develop so much stronger than all others? In a large organization, it is generally hard to say how valuable the work of every individual person is. Nevertheless high incomes imply top managers on the whole have the power to determine their own salaries. This thesis is empirically well proven.


If the inequality in work incomes can be brought under control, another factor from history often strengthens little inequalities until they reach extreme levels. That is the case when asset profits for owners of capital accumulate faster than the economy grows. The share of capitalists in the total income rises even more at the expense of the middle and lower classes. The inequality in the 19th century was worse because asset profits surpassed economic growth. These conditions will probably be repeated in the 21st century. According to Forbes’ global billionaire ranking, top assets grew three times as fast between 1987 and 2013 than the world economy. The following table shows the general trend of the growth of wealth and incomes for different groups.

Table: Average annual growth rate of assets/ incomes for different groups of the world population

Group Average annual growth rate 1987-2013 (%)

Assets of the richest hundred millionth 6.8

Assets of the richest twenty millionth 6.4

Worldwide GDP 3.3

Worldwide average assets per adult 2.1

Worldwide average income per adult 1.4

Source: Capital in the 21st Century


The inequality in the US may now be so massive and political processes so captured by the top earners that this will not happen – as in Europe before the First World War. But that should not keep us from striving for improvements. The ideal solution would be a global progressive tax on individual net assets. Those just starting out would pay little while those who own billions would pay much. That would keep inequality under control and enable climbing the ladder to the top. It would put the global dynamics of asset development under the control of the public. The lack of financial transparency and reliable wealth statistics is one of the greatest challenges for modern democracies.

Obviously there are alternatives. China and Russia must also deal with wealthy oligarchs with their own means: with capital controls – and prisons whose bleak walls restrain the most ambitious oligarchs. A worldwide wealth tax is the better way for countries that prefer the rule of law and an international economic system. Perhaps China will even be convinced by us. Inflation is another potential solution. In the past, inflation helped relieve the burden of public debts. But inflation also reduces the savings of the less well-to-do. Thus a tax on mammoth assets seems more sensible.

A worldwide wealth tax would need international cooperation. This is hard but feasible. The US and Europe are responsible for a quarter of worldwide economic output. If they would speak with one voice, a global claim on financial assets would be within range. Sanctions could be imposed on tax havens that refuse cooperation. If this does not happen, many could turn against globalization. When they find a common voice one day, the forgotten mantra of nationalism and economic isolation will be recited.

[This article was originally published on the LSE British Politics and Policy Blog.]


By Hagen Kramer

[This article published on July 18, 2014 is translated from the German on the Internet,]

What determines income distribution in the long term? For neoclassical theory dominant today, the economic laws are crucial against which social groups anxious for distribution cannot prevail. Power factors play practically no role in conventional analysis although always present in wage negotiations. This is hardly different in the bestseller “Capital in the 21st Century” by Thomas Piketty. In his models, functional income distribution is defined “technically”, as Piketty writes in several passages. The influence of power on distribution is not considered.

A hundred years ago the Austrian economist Eugen von Bohm-Bawerk in an essay with the same title raised the question about the determination of income distribution: “Power or Economic Law?” He lay the foundations for the neoclassical answer that economic laws solely determined income distribution in the long run. Since the French economist Thomas Piketty’s analysis and prognosis are often judged radical and innovative, I ask myself how the Bohm-Bawerk question is answered in the bestseller “Capital in the 21st Century.”


When Piketty’s explanatory model of fixing wages and profits in the aggregate economy is analyzed more closely, he seems to argue very conventionally. His model of growth and distribution is based on the current assumption of a neoclassical production function. In such a model, the functional income distribution is determined exclusively “technically.”

The situation on the labor market has a decisive influence on the negotiating position of the parties to wage agreements – not only in the short-term. This is hard to deny. The negotiating power in wrestling over the wage level depends on the situation on the labor market. To my amazement, the factor unemployment does not play any role with Piketty! There isn’t even an entry in the keyword index of his 650-page book.

This is a central contradiction that in my opinion is out of place in Piketty’s otherwise convincing argumentation. For me, Piketty’s great merit is that he shows that some of the sty8lized facts that marked the standard models of growth and aggregate economic income distribution for decades are not true any more. He demonstrates this on the basis of admirable empirical studies. The capital-coefficient is not constant in the long-term nor the profit rate as Nicholas Kaldor assumed in an influential argument in the 1960s. Piketty undergirds this with solid data. The reality-based models cannot be ignored in the future.


For Piketty, the analysis of capital and capital incomes is at the center, not work or labor. In his book as in many earlier studies, he intensively discusses the incomes of top managers and shows that the marginal productivity theory cannot be applied in fixing manager compensations. For determining wages in general, he has no problem starting from the authority of a neoclassical production function. However this approach is only acceptable when full employment situations are analyzed since the production function is based on the idea of the efficient use of resources.

Full employment has been the exception, not the rule for a long while in the reality of market economies. The negotiating power between capital and labor has to be influenced by permanent unemployment. A glance at development in Austria illustrates this connection. The highest labor-income rates are found (with a certain time-lag) in the times of full employment of the 1960s and 1970s. The labor-income rate fell again and again with the rise of the unemployment rate in the middle of the 1970s and particularly since the beginning of the 19809s. Developments in other OECD countries look very similar. The question could be raised why the brilliant empiricist Piketty completely fades out this factor from the analysis of income distribution. [The labor-income rate is conceptually similar to the corrected wage rate in Austria.]

Piketty’s relation to the neoclassical macro-economic distribution theory is also dubious for theoretical reasons. In the framework of the theoretical controversy over capital of the 1960s, the different capital goods cannot be aggregated to a single reality “capital” outside of a one-sector model. The great US economist Paul A. Samuelson admitted this at the end to critics of the theory of neoclassical production and capital from Cambridge (England). However Piketty’s presentation of the Cambridge-Cambridge controversy completely passes by the core of this argument. He was way off the mark when he said in his book that he supposedly tackled the question about the constancy of capital-coefficients. Obviously he is not very familiar with this problematic.


With his book and his research projects, Piketty helped move distribution questions into the focus of the public and economic research. This is absolutely necessary. On the other hand, a convincing theoretical model explanation for analyzing income distribution is lacking. The process of concentration of incomes and assets continually advanced in the past. We can assume this development will continue for different reasons. But the explanations offered us by Piketty are inadequate. [This article was originally published on the Herdertrieb (herd instinct) blog.]

Report this post as:

Listed below are the 10 latest comments of 1 posted about this article.
These comments are anonymously submitted by the website visitors.
Myths of Capitalism: A Guide for the 99% Andrew Torre Thursday, Sep. 25, 2014 at 3:16 PM

Local News


lausd whistle blower A10 11:58PM

Website Upgrade A10 3:02AM

Help KCET and UCLA identify 60s-70s Chicano images A04 1:02PM

UCLA Luskin: Casting Youth Justice in a Different Light A02 11:58AM

Change Links April 2018 A01 11:27AM

Nuclear Shutdown News March 2018 M31 6:57PM

Join The Protest Rally in Glendale on April 10, 2018! M29 7:00PM

Join The Protest Rally in Glendale on April 10, 2018! M29 6:38PM

Spring 2018 National Immigrant Solidarity Network News Alert! M19 2:02PM

Anti-Eviction Mapping Project Shows Shocking Eviction Trends in L.A. M16 5:40PM

Steve Mnuchin video at UCLA released M15 12:34AM

Actress and Philanthropist Tanna Frederick Hosts Project Save Our Surf Beach Clean Ups M06 12:10PM

After Being Told He's 'Full of Sh*t' at School Event, Mnuchin Demands UCLA Suppress Video M02 11:44AM

Resolution of the Rent Strike in Boyle Heights M01 6:28PM

What Big Brother Knows About You and What You Can Do About It M01 3:30PM

Step Up As LAPD Chief Charlie Beck Steps Down F14 2:44PM

Our House Grief Support Center Hosts 9th Annual Run For Hope, April 29 F13 12:51PM

Don’t let this LA County Probation Department overhaul proposal sit on the shelf F13 11:04AM

Echo Park Residents Sue LA Over Controversial Development F12 8:51AM

Former Signal Hill police officer pleads guilty in road-rage incident in Irvine F09 10:25PM

Calif. Police Accused of 'Collusion' With Neo-Nazis After Release of Court Documents F09 7:14PM

Center for the Study of Political Graphics exhibit on Police Abuse posters F07 9:50AM

City Agrees to Settle Lawsuit Claiming Pasadena Police Officer Had His Sister Falsely Arre F04 3:17PM

Professor's Study Highlights Health Risks of Urban Oil Drilling F04 12:42PM

Claims paid involving Pasadena Police Department 2014 to present F04 10:52AM

Pasadenans - get your license plate reader records from police F03 11:11PM

LA Times Homicide Report F03 1:57PM

More Local News...

Other/Breaking News

Doxa du lobby A25 2:03AM

Tech workers organize A24 6:24PM

Architect Stephen Francis Jones A24 3:01PM

UN Forum Wrestles with Economic Policies 10 Years After Financial Crisis Islands Call for A24 12:34PM

Xyloglossie attitudinale A23 8:07AM

Shadowgun Legends Hack and Cheats A23 7:24AM

What does the Quran Say About Islamic Dress?? A21 4:15PM

Biodiversité ou la nature privatisée A20 11:22AM

The Market is a Universal Totalitarian Religion A20 7:14AM

Book Available about Hispanics and US Civil War by National Park Service A19 5:52PM

The Shortwave Report 04/20/18 Listen Globally! A19 4:01PM

The Republican 'Prolife' Party Is the Party of War, Execution, and Bear Cub Murder A19 11:48AM

Neurogenèse involutive A18 9:21AM

Paraphysique de la dictature étatique A16 10:13AM

Book Review: "The New Bonapartists" A16 3:45AM

The West Must Take the First Steps to Russia A14 12:25PM

Théorie générale de la révolution ou hommage à feu Mikhaïl Bakounine A14 3:30AM

The Shortwave Report 04/13/18 Listen Globally! A12 3:50PM

“Lost in a Dream” Singing Competition Winner to Be Chosen on April 15 for ,000 Prize! A12 3:48PM

The World Dependent on Central Banks A12 4:43AM

Ohio Governor Race: Dennis Kucinich & Richard Cordray Run Against Mike DeWine A11 9:40PM

March 2018 Honduras Coup Again Update A10 10:52PM

Apologie du zadisme insurrectionnel A10 3:33PM

ICE contract with license plate reader company A10 1:14PM

Palimpseste sisyphéen A09 11:23PM

Black Portraiture(S) IV: The Color of Silence...Cuba No...Cambridge Yes A09 5:32AM

Prohibiting Micro-Second Betting on the Exchanges A09 4:18AM

Prosecutors treat Muslims harsher than non-Muslims for the same crimes A08 10:33PM

More Breaking News...
© 2000-2018 Los Angeles Independent Media Center. Unless otherwise stated by the author, all content is free for non-commercial reuse, reprint, and rebroadcast, on the net and elsewhere. Opinions are those of the contributors and are not necessarily endorsed by the Los Angeles Independent Media Center. Running sf-active v0.9.4 Disclaimer | Privacy