Piketty’s data

[Young Master Smeet]

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Productivity is even more significant than GDP per capita because without growth employers can’t increase wages.

And herein the pernicious lie, and (in line with what Piketty has been saying) the problem for reformists.  It's easy to give away wages when productivity is rising, especially as the increase in wages will not be the same as the total increase in productivity.

[alanjjohnstone]

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And herein the pernicious lie, and (in line with what Piketty has been saying) the problem for reformists.  It's easy to give away wages when productivity is rising, especially as the increase in wages will not be the same as the total increase in productivity.

Do we really have to thank Piketty for this information since i thought it was accepted widom already supported with sufficient data. Has Piketty furnished more addional statistics and facts specifically on this aspect. If so, either the reviewers i have read over-look them or i over-looked their mention of it. Back in th UK for a short trip next month…bound to be able to pick up a 2nd hand copy of the book in the charity shops so i can read what all the fuss is about for myself.

[Young Master Smeet]

I don't think we have Piketty per se to thanks for that data (although I gather his conclusion is low growth is likely to be a feature of capitalism for sometime), I just drew back to him since the thread is ostensibly about his data.

[alanjjohnstone]

The feminists now have their say on the bookhttp://www.truth-out.org/news/item/25456-how-gender-changes-pikettys-capital-in-the-twenty-first-century

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In Capital, Piketty proposes a global wealth tax to spread the economic benefits of returns on capital more equitably, which, theoretically, would close the wealth gap between classes. But there are also ways to target the wealth and wage gaps amongst women and people of color specifically. As Dean Starkman notes in The New Republic, targeted redistribution can close the white-black wealth gap and a wide set of solutions already exist that target equal pay and equal opportunity for women.With these solutions and others, we can begin to correct the widening inequalities that are pushing out women and people of color. And, the effects of wealth and wage inequalities on marginalized groups is multiplied many times over. Exercising the political will to correct inequalities is not just a matter of economics; it’s a matter of social justice.

 Simply everyone is lining up to "benefit" from Piketty's reform. I'll keep on repeating, it is reformism that has to be tackled, rather than crediting the book's research.

[ALB]

Actually I think it's the other way round. Rather than people lining up to benefit from "Piketty's reform" (which is not going to happen anyway as he himself admits) it is long-time reformists lining up to use Piketty's analysis to back up their already-launched reform campaign. A bit like how in the 1930s and 40s long-time reformists used Keynes's ideas on government intervention to back up their call for this.It's not even as if these people's particular reform is desirable anyway. It's not about redistributing wealth and income from the rich, whether men or women or black, blue or white, to the non-rich, whether men, women or whatever, but about redistributing wealth and income from all "white" men, including workers, to all women and "people of colour", including capitalists.

[SocialistPunk]

Not sure this belongs on this thread but couldn't think of anywhere else and didn't think it needed a thread of its own and seeing as taxation is a theme here…..A bit of info seeking about taxation. Does anybody have any info, proof etc that  the burden of taxation falls on the capitalist class? I've been searching on the net for any figures etc and can't seem to find anything through the minefield of info.  

[Brian]

SocialistPunk wrote:

A bit of info seeking about taxation. Does anybody have any info, proof etc that  the burden of taxation falls on the capitalist class? I've been searching on the net for any figures etc and can't seem to find anything through the minefield of info.  

Many years ago I done some research into who actually pays for social security.  It took many months but eventually got a result which not suprisingly confirmed that the payments of national insurance by the working class did not even cover the cost of administration of social security, let alone the payment of benefits.  If I remember correctly the direct taxation payed by the workers did not amount to much either.However, the figures you seem to be after wont just cover social security costs but also a whole host of other costs for administrating the system e.g. central and local government (including the NHS), quangos, grants and subsidies, etc.  You need to go to the General Revenue Account and calculate what is taken in taxation and national insurance from the working class and then compare this figure with the total taxation on profits and high incomes and then find out what is payed out to run the system by the state.  The payment of VAT could be a minefield. Best of luck with that!I think you'll find only a rough figure, even for an accountant, is possible to arrive at .  But common sense tell's me that its impossible for the workers to pay for their own maintenance.

[Anonymous]

Income tax appears to be paid by workers but it is a tax on the purchase of labour power. Wages are generally determined by the cost of producing and reproducing labour power (which tends towards its exchange value). Which by the way, is why a brain surgeon receives more wages than a checkout operator. The cost of producing a brain surgeon is higher. "If all taxes which bear on the working class were abolished root and branch, the necessary consequence would be the reduction of wages by the whole amount of taxes which goes into them. Either the employers' profit would rise as a direct consequence by the same quantity, or else no more than an alteration in the form of tax-collecting would have Our argument is that although some taxes are paid by the working class, the burden of taxation rests on the capitalists and has to be paid out of the profit accruing to them in the form of rent, interest and profit, the basis of which is the unpaid labour."Criticism and Critical Morality (Marx and Engels Collected Works—Volume 6.) 

[ALB]

Oddly perhaps, one of the clearest modern explanations of why a tax on wages ends up as a tax on profits was set out in a discussion document on a proposed tax policy for UKIP that used to be on their site. It was written by Godfrey Bloom, described as a "financial economist". At the time he was one of their MEPs. Later he was booted out of UKIP for making a politically incorrect remark about women and his proposal taken down. But we kept a copy.Here's the relevant extracts from his document:

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1. 2 The earnings of employed people are not a legitimate target for taxationIncome tax (and NI) extracted from wages through the PAYE system is, by its nature, severely counter-productive.Like VAT there is a general failure to distinguish the mechanics of the tax’s calculation from its incidence (who actually bears it). Tax under PAYE is calculated by reference to a purely notional figure called "gross pay", which no employed person in history has ever seen, let alone touched or spent. The employee's real income is of course the net pay; and that amount of tax which has been "deducted" is always the employer's liability, to be remitted by the employer to HMRC in full, every month. As with VAT, the employers are the de facto tax-collectors. In this case they are also the tax-payers!

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1.  3.     Every attempt to tax wages sets in motion a "shifting" process whereby the tax finishes up as a corporate impost anywayThis phenomenon was clearly set out 220 years ago in Adam Smith’s illustration of an employee earning £100. If the state imposes a tax of 20% his pay must rise by 25% in order to re-instate the employee's former purchasing power (£100). He must now be paid £125 so that the 20% tax leaves him with disposable earnings of £100. In practice there may be a time-lag over which purchasing power (or the basic standard of living) is restored, but national statistics always show a ratio between real (net) pay and GDP that tends toward a constant. The effect is always inflationary as the costs, no matter how notional, feature in the revised price structure.1   4.     You cannot "tax" the earnings of those who are paid out of taxesThe application of the entire PAYE rigmarole to employees in the public sector is a nonsensical charade whereby tax on the imaginary figure of "gross" pay of public sector employees is "taken" by HMRC and given straight back to HMRC in its capacity as collector.We know from the above arguments that taxing people's wages finishes up in effect as a corporate tax when the ramifications are laid bare, but the notion of applying this process to the earnings of those who are paid out of taxes lends it a still more farcical twist.  It enters into price structures throughout the community and thereby fuels inflation and distorts all public sector costings.

Bloom's beef was that PAYE taxes fall disproportionately on smaller businesses, a section of the capitalist class that UKIP seeks to represent (and does represent to a certain extent). But he still made a valid point that had been made by David Ricardo and by Marx as well as by Adam Smith. 

[alanjjohnstone]

Hmmm…didn't somebody predict that Piketty would be forgotten…even on this list.Nevertheless, i came across this article which may revive the debate. http://www.countercurrents.org/parsons280814.htmAfter an intro saying much the same as others have:

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Piketty's analysis has done a great service for progressives, in that it uses comprehensive data sets to discredit the prevailing economic ideology of our time. It is no longer just common sense to presume that extreme wealth is not good for everyone, and that the invisible hand of the free market will never lead to a fairer sharing of wealth among the population.

As we have said , the article talks of going  beyond Piketty but as some here as argued

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But unfortunately, this is not the conversation that has been spurred by Piketty's analysis

Although  "Share The World's Resources" produces itself lots of useful data, it is also limited by a lack of ambition and will settle for co-ops and some form of humane gass-roots capitalism of re-distribution but at least they do consider a world that is not defined by a wealth tax . 

[DJP]

Article by Andrew Kliman on Piketty. Have yet to properly give it a read though…http://www.truthdig.com/report/item/were_top_corporate_executives_really_hogging_workers_wages_20140917

[Brian]

DJP wrote:

Article by Andrew Kliman on Piketty. Have yet to properly give it a read though…http://www.truthdig.com/report/item/were_top_corporate_executives_really_hogging_workers_wages_20140917

Its pretty damning on how Piketty calculates his data on the income of the "super managers", and concludes:The supposed “rise of the supermanager” therefore seems not to explain much of the growth in income inequality seen in the U.S. It is certainly not the primary cause of the rising share of income captured by “the 1%” and the “0.1%.” Nor is it a main driver of the divergence between median compensation on one hand and average compensation and productivity on the other. It follows that this latter trend must be due, overwhelmingly, to increasing inequality among the rest of the workforce—that is, within the gigantic pool of employees who are not supermanagers. Thus, if we want to understand why the typical worker’s pay has increased relatively modestly, we must set aside the myths that rising profits and skyrocketing executive salaries were the chief culprits and focus on the sources of increasing inequality among workers, as I will in a future piece.Looking forward to his next piece on increasing inequality among workers.

[ALB]

Here's Zizek's comment on Piketty:

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As with everyone I of course admire Piketty's book. But I think that his solution, raising the taxes for the rich, is utopian. Why? For two reasons. First, Piketty is very clear about this point. He think capitalism is the only system that works. So he wants to keep the capitalist dynamics but just make it more just through higher taxes. I think in today's global capitalism you cannot do this. So would have to have some kind of global government which would be able to impose these higher taxes universally. But if we have this then we, radical left, already won. Then we no longer live in the same capitalist world. So Piketty's solution presupposes that we already won.Next point: even if, let us say, some social democratic government were to introduce higher taxes, in order to elect and maintain this measure other changes will have to follow. You cannot have capitalism the way we have it, just with higher taxes. And here I see the problem. I am more of a pessimist – this doesn't just go for Piketty, this goes for Paul Krugman, Joseph Stieglitz and so on. Yes, we should begin with what they propose, but we should be aware that this is just the beginning. And the problem is what comes next. Where much tougher measures are needed.

It's here. Scroll down to entry for 8 October at 2.59 pm.

[Ozymandias]

I doubt Zizek would pass the knowledge test what with all his rambling I've just read from the GuardIan Webchat. He pisses me off as much as Naomi Klein, Michael Moore, David Harvey, Richard D Wolff, Chomsky, Peter Joseph and all the rest of them. By contrast I recently watched Richard Headicar's devastating talk on how Labour came to gift us the Atom bomb. This guy could blow any of these muddled charlatans out of the water. Philosophers my arse. 

[ALB]

DJP wrote:

Article by Andrew Kliman on Piketty. Have yet to properly give it a read though…http://www.truthdig.com/report/item/were_top_corporate_executives_really_hogging_workers_wages_20140917

Just got round to reading this. It's a criticism of one of the explanations suggested by Piketty for the rise in income inequality in recent years whereas, as socialists, we are more interested in the inequality of the ownership of  wealth, or more precisely of income yielding assets,Kliman's article does raise some interesting points about what part of the income of "supermanagers" is really payment for work and what is a share of surplus value either disguised as a part from of their "salary" or as dividends and capital gains from their own personal ownership of stocks and shares. Either way, it shows that inequality of income is due to so much of the income of the top 1 or so percent being a non-work income.

[Author]

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