Notes on Capital and Ideology

Major points: 

• Every inequality regime needs a rationale, an ideology that justifies why it exists, why it's fair.  Ours says that it's a "meritocracy" where the entrepreneurial and hard-working thrive. It is therefore much more "blamey" than, say, medieval society because in our society if you aren't successful, it's your own fault.  This argument is problematic for many reasons.  One is that access to education, particularly higher education, is highly unequal, and highly correlated to economic success.  

• Our current inequality regime is not "natural" or "inevitable".  It evolved out of a particular set of historical circumstances, and can and has changed over time, sometimes radically and quickly.   Piketty illustrates this by describing a wide variety of historical circumstances ranging from Ancien Regime France through post-colonial India. For example, Britain financed the Napoleonic Wars by issuing interest-paying bonds. The money to pay the interest on these bonds was raised by levying  regressive taxes (like tariffs) on the entire population.  Over the next century, this amounted to a huge wealth transfer from lower and middle income tax payers to the wealthiest members of British society (who were bond-holders).  However, Britain paid for the First World War by introducing a progressive income tax and steep death duties, both of which primarily affected the wealthiest. The difference? The franchise was extended in the late 19th to early 20th Century to cover all adult males (and eventually females).

• No form or conception of "property" or ownership is natural, inevitable, or universal. (see different conceptualization of property ownership in Ancien Regime, which included numerous obligations for land owners).  
• No particular level or type of inequality is necessary to have a high growth economy: economies where the top decile takes 20% of all income and economies where the top decile takes 80-90% can both be economically successful (although levels of inequality that high generally only occur in slave societies)

What changes should we make?  

• Reconceptualization of ownership as 'temporary' and only justified when it causes a social good.  ie/ 
• Return to having high marginal tax rates on the highest incomes (rates reached 80-90% in the 1970s in Britain and the US), a steeply progressive inheritance tax on the largest fortunes, and a wealth tax.  Think of the wealth tax as an extended "property tax", that applies to all wealth and not just real estate.
• Structural redistribution of societal wealth, funded by wealth tax.  That is, every young adult gets an equal allotment of capital at age 25 equal to perhaps 60% of average wealth in society (or 3.5 X annual income, or $150k in Canada).  Think of it as an early universal inheritance, that comes at a time of life when it can do people the most good.
• Weaken the power of "ownership".  Make the involvement of workers in the governance of all firms compulsory, as it is in Germany and Sweden where workers get seats on corporate boards. Perhaps couple this measure with further limits on the number of corporate board votes per $ invested to limit the influence of the largest shareholders
• Stop the 'race to the bottom' and inter-state tax competition.  Stop making treaties like NAFTA or CETA that focus on trade and freeing capital from international control, and start making pacts that focus on economic justice, enforcing financial transparency, and minimum taxation levels.
• Create transnational unions with real teeth, where the transnational union focuses on enforcing consistent inheritance taxes, income taxes, corporate taxes, etc. between nations.

Analysis of changes in voting patterns across a wide range of societies:

•  Piketty talks about how support for social democratic parties has collapsed amongst those in the lowest deciles of income beginning in the 1960s but particularly since 1980. Reason? social democratic parties had no answer to Reaganism/Thatcherism, and instead largely adopted the neo-con's destructive anti-tax and globalist agenda.   This has impoverished those in the bottom 50% of the income distribution. 
• Political participation in this group has dropped dramatically overall.  
• Because no one seems to be  representing their interests and because all political discourse focuses on how TINA to current economic policies, they turn to zenophobic and exclusionary parties and politics. Think of it from their perspective:  they are told that the pie has to be smaller, so there's a certain logic to their saying that we need to exclude immigrants to preserve what's left of the pie for them.  
• support for social democratic parties scales with education: the most educated are the most likely to support social democratic parties.  This "Brahmin left" benefits from globalization and inclusionary policies, as economic success in a globalized economy is correlated with education.

 Random facts/points:

• Since 1980s, top decile's share has risen to 55% while bottom 50% share has decreased to 15%.  Globalization has benefited richest (top 1% have taken 27% of all global growth), and poorest in poorest countries (bottom 50% globally got 12% of global growth).  Middle suffered.
• the change in the 1980s led by Reagan/Thatcher to much lower taxes and to privatization was a mass transfer of public assets/wealth to private interests.  Comparable (though smaller) than the liquidation of the assets of the Soviet empire which enriched  Russian / Eastern European oligarchs/ kleptocrats.
• on around page 600-630 Piketty includes an interesting discussion of how China is governed, and how it sees the West and its governance
• p. 666: carbon emissions are as inequal as wealth.  Yellow vest movement in France shows you cannot reduce taxes on wealthy while imposing a carbon tax on everyone.  "there can be no effective carbon policy that ignores economic justice or people will rebel"

• His discussion of slavery as an economic issue not a social issue felt kind of sickening, frankly, even though it's enlightening.  I suspect that in the future our current arguments that we can't act to stop climate change because we can't afford it will feel just as apocalyptically unjustifiable as the economic arguments made at the time against abolishing slavery. (There was a general feeling that slavery could not be abolished without fully compensating slave owners for their economic losses, which would have been a huge economic burden. To today's ears, the focus on compensating slave-owners, and the complete lack of consideration to compensating enslaved people for their enslavement is appalling.)