Tuesday, September 20, 2016

Piketty's Equation

With all due respect, I would like to suggest Thomas Piketty's equation r > g illustrates the power of capitalism and not a structural contradiction as he suggests.  The fact that capital favors those who possess it does not by default diminish its worth to society.  Capitalism is what it is.  The problem arises not in the migration of additional capital to the owners of capital but in our failing to redirect the power of capital toward the needs of humanity.

Capitalism cannot be blamed for a lack of political will or a lack of understanding of our own capabilities.  We should be grateful we have at our disposal an engine capable of providing for everyone's needs along with the needs of societies at large.  Complaining that capitalism does not perform up to expectations is like parents complaining they have lousy kids.  We need to find a way to take the power of capitalism and point it toward a sustainable end.

One place to start would be in the creation of a sufficiently progressive tax code.  While our tax code is ostensibly progressive, it lacks the foresight of sustainability. We have been unwilling or politically unable to tax wealth and high income earners at a rate sufficient to make capitalism viable.

John Steinbeck, writing in the 1930s, identified a flaw in the American character when he said, "Socialism never took root in America, because the poor see themselves not as an exploited proletariat but as temporarily embarrassed millionaires.”

With the proper amount of political will, we can redistribute wealth through a sufficiently progressive tax code and use the power of capitalism to benefit us all.  If squirrels had relied on capitalism as it is defined today, where a few stored most of the acorns for the winter, the species would have experienced the kind of fate we are facing today.

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