Larry Summers via the Democracy Journal has an easily-accessible review of Piketty’s ‘Capital In The Twenty-First Century‘, called ‘The Inequality Puzzle.’
Among other interesting thoughts, there’s this:
‘…there is the basic truth that technology and globalization give greater scope to those with extraordinary entrepreneurial ability, luck, or managerial skill. Think about the contrast between George Eastman, who pioneered fundamental innovations in photography, and Steve Jobs. Jobs had an immediate global market, and the immediate capacity to implement his innovations at very low cost, so he was able to capture a far larger share of their value than Eastman. Correspondingly, while Eastman’s innovations and their dissemination through the Eastman Kodak Co. provided a foundation for a prosperous middle class in Rochester for generations, no comparable impact has been created by Jobs’s innovations’
Eastman Kodak is going through Chapter 11, as those Kodak innovations have been surpassed as well (I remember family gatherings around the slide projector, holding strays up to the light).
It seems there’s a race on right now for political, policy, and ideological means of explaining and adapting to the dislocation and rapid changes going on in our lives. Changes like immediate access to global markets and to relatively cheaper foreign labor. There’s also, as Summers points out, a lot of automation coming down the pike. The erosion of manufacturing jobs and the coming of robots, 3D printing, automated cashiers etc. will continue to shake things up across our society, altering how we work and live.
As for Piketty’s reception in the States, I’m guessing those who share in more basic assumptions (often anti-capitalist) about r > g being not only a potentially valid empirical observation, but a likely fatal flaw and nearly cosmic affront to justice within the capitalist system, they naturally welcomed the book. There aren’t a lot of card-carrying Marxist economists left, but there are people sympathetic to manifestations of Left-liberal thought which would harbor many…sympathies, especially in the political realm: Union organization and protectionism, the pursuit of social justice and redistribution of wealth, the genuine cultural Marxism of some feminists and some disgruntled reds who’ve gone green, a mild to virulent anti-corporatism in favor of a more collectivist Statism.
On that note, is the constant hammering of inequality in progressive fashion a winner for Democrats politically? Megan McArdle argues perhaps not on the city/country divide: ‘Inequality’s A Loser For Democrats.’
‘You can make a case that the difference between the Republican and Democratic politics of wealth lie in the difference between who tends to make up “the wealthy” in their districts. The rich of America’s affluent urban areas tend to be the beneficiaries, one way or another, of a global tournament economy in which markets are often close to “winner take all,” and vast sums can flow to people who are just a little bit better than their competitors. The wealthy in Republican districts, on the other hand, are more likely to be competing in local or national markets, not glamour industries, where sales are ground out one at a time. Because the sums involved are smaller, the wealth gap is also smaller — and business owners are less likely to be sympathetic to the idea that their success has a huge luck component.’
I wonder about a correlation between mobile capital, access to global markets, high-rates of immigration and more redistributive policy solutions in major cities? There certainly are very ambitious and talented people drawn to New York and San Francisco, for example, and more extreme examples of rich and poor (usually along with a lot of political corruption, higher crime etc).
But does cosmopolitanism naturally lead towards policy solutions which favor redistribution of wealth, or some overall regulatory framework?
A greater likelihood to recognize that sometimes it’s better to be lucky than good?
Have global markets untethered even American companies more than previously from local responsibilities and tax obligations?
Readers of this blog know I like the idea of Burkean conservatism: Family, friends, churches, Little-league, the Rotary club, good ole American volunteerism in small town fashion are what form much of America’s backbone, and are vital to securing our liberties. Yet, they too are subject to global markets and subject to the changes going on right now. (I’m also fond of a kind of Jeffersonian liberalism, which perhaps while not religious and socially conservative, can protect individuals from large institutions and state structures and the excesses and over-promising of Statists and progressives).
There’s a lot to think about these days, especially where globalization and technology meet economics and political philosophy.
Tell me what I’ve got wrong. Any thoughts and comments are welcome.
Addition: Richard Epstein-Piketty’s Rickety Economics.
Martin Feldstein at the WSJ (behind a paywall)-Piketty’s Numbers Don’t Add Up.
Repost-Revisting Larry Summers: What Did He Say Again?…Why Do People Move To Cities? From Falkenblog: ‘The Perennial Urban Allure’
Technotopia And Politics-Jonah Goldberg At The National Review Online: ‘Minimum Wage And The Rise Of The Machines’
Cities should be magnets for creativity and culture? –From The Atlantic: Richard Florida On The Decline Of The Blue-Collar Man…From Grist.Org Via The New Republic Via The A & L Daily: ‘Getting Past “Ruin Porn” In Detroit’… some people don’t want you to have the economic freedom to live in the suburbs: From Foreign Policy: ‘Urban Legends, Why Suburbs, Not Cities, Are The Answer’
Megan McArdle At Bloomberg: ‘Piketty’s Tax Hikes Won’t Help The Middle-Class’…David Harsanyi: ‘What Thomas Piketty’s Popularity Tells Us About The Liberal Press?’
Walter Russell Mead takes a look at the blue model (the old progressive model) from the ground up in NYC to argue that it’s simply not working. Check out his series at The American Interest. Technology is changing things rapidly, and maybe, as Charles Murray points out, it’s skewing the field toward high IQ positions while simultaneously getting rid of industrial, managerial, clerical, labor intensive office jobs. Even so, we can’t cling to the past. This is quite a progressive vision but one that embraces change boldly. Repost-Via Youtube: Conversations With History – Walter Russell Mead