UBI: Creeping Communism or Libertarian Liberation?

Review of "Give People Money", advocating for Universal Basic Income, by Annie Lowrey. Subititled "How a universal basic income would end poverty, revolutionize work, and remake the world".

This is a good book if one wants to read a litany of complaints about late capitalism- inequality, crummy work, appalling poverty in the midst of plenty, gender inequality and unpaid work, misdirected foreign aid. One might indeed say that never have so many reasons been adduced for a policy with which they are so tenuously connected. To put the argument briefly, if we were to give everyone in the US a monthly income of, say, $1,000, no questions asked, it would by definition end poverty, set an effective minimum wage of roughly $6.25 (full time), and cost about $3.8 trillion, roughly doubling the federal budget.

What are the various problems that the UBI is thought to address? First is of course poverty. While $6.25 is even below the current minimum wage, it is enough for a bare existence. Lowrey cites several experiments in poor third world countries that show that this kind of income is generally put to good use- much better use than aid that comes in the form of second-hand clothes, bed nets, shoes, or any of the other myriad do-good schemes that first world donors cook up. But there is a crucial difference- these experiments are conducted among a functional population generally at par for their society, whose only problem is that they, as are everyone else around them, poor, relative to more developed economies, whose goods and technologies are available for a price.

The poverty-stricken in the US are, by contrast and almost definition, dysfunctional, with health problems, drug problems, intellectual problems, and other issues that money alone is unlikely to fix, and may well make worse. San Francisco has had, for example, a long-term program to switch from money to in-kind and supportive care. If the problem is merely lack of money, then yes, cash assistance is an ideal solution. But UBI is, for this problem, a nuclear bomb, spewing money to everyone regardless of need, and possibly to the detriment of those in the most need of more structured help. There are better policies, as there are for virtually every problem that UBI putatively addresses.

Day laborers wait for work. Would UBI help?

Another problem dwelt on in the book is crummy jobs and inequality in its many dimensions, from a slipping middle class to persistent gender and racial discrimination and lack of wealth accumulation. Needless to say, the pittance represented by UBI is going to address none of these issues. The best that might be said is that it gives something, which is more than nothing, to those out of the workforce who are caring for children, the elderly, on a love-instead-of-money basis. And since the poor are disproportionately female and minority, they would also benefit the most from UBI, at least in subjective / relative terms. But again, it is a pittance, and since everyone gets the UBI, it does a poor job addressing inequality, particularly if its funding comes from a regressive source like a carbon tax, though better if it comes from an income or financial transaction tax. It does not even raise the minimum wage, given its extremely low level.

The more convincing, and libertarian, argument for a UBI is its simplicity and possible role in replacing other poverty programs. Aid like food stamps, housing assistance, and work training are all rather paternalistic and ridden with absurd paperwork, dehumanizing conditions, and arcane regulations. While some of these burdens come from simple bureaucratic evolution, most come from intentional policy built up to discourage people from becoming poor by penalizing and controlling them in various ways, resulting usually from right-wing and Southern racist politics. Replacing much of this with cash is very attractive, even if much of the new income will be wasted or if its amount fails to cover actual needs like housing in expensive areas. However, as mentioned above, many of the poor are dysfunctional, and got to where they are due precisely to their inability to handle money. To make cash assistance work, the responsible sheep would need to be separated from the goats who will end up on the street even with a UBI. This would inevitably bring back the caseworkers, rules, and other periphernalia of the welfare state.

The next level of the libertarian argument is that robots are going to take all our jobs, to which UBI is a solution. It pains me to have to say this, but this makes little sense. First, automation has been with us since the invention of the spear. Lowrey herself quotes Bill Gates: "What the world wants is to take this opportunity to make all the goods and services we have today, and free up labor let us do a better job of reaching out to the elderly, having smaller class sizes, helping kids with special needs. You know, all of those are things where human empathy and understanding are still very, very unique. And we still deal with an immense shortage of people to help out there." Clumsily put, but you get the idea- taking care of each other is the core of what we as people want to do, and should be doing. Making widgets is only one baroque byway on the true path of our life's work. Lowrey closes by mentioning the Star Trek economy- where no one needs money, all fundamantal needs are fulfilled, yet there are still jobs and ambition- a competition for status directly, not via the accumulation of money, but through the medium of work and service.

But this is probably not what libertarians have in mind. Their idea is more that the eggheads and Hank Reardons of Silicon Valley can keep on working their interesting, highly paid jobs, and not worry about stepping over homeless people, or being responsible employers in the new app-disintermediated gig economy, or facing the pitchforks of a vast and growing proletariat, all by feeding them crumbs of UBI. It is hardly an attractive future. On the other hand, one can view UBI as the first phase of future communism, where everyone shares in a basic level of decency, regardless of contribution. The UBI might be programmed to increase with time, in proportion to economic productivity or technological displacement. I can not regard this as an attractive future either, really, given the fundmantal importance of work in our personal and communal lives, and the impossibility of seeing an end to work, or having some principle to tell us what the best level of UBI should really be. Having ever-growing numbers of parasites living off the fat of the robots is reminiscent of ancient Rome, where maybe one fifth of the city population was on the dole, supported by the vast resources of the empire and armies of slaves. While this system was durable, lasting over five centuries, it does not look to me like one worthy of emulation.

Lastly, there are the children. Lowrey does not go into in detail since its ramifications may be so perverse, but supposing that UBI is granted from birth, the accumulation of children would likewise accumulate a sizeable income. Such an excessively pro-child policy would encourage more children among those most poor and most dependent on UBI, a social and plantery disaster.

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What is an alternative to all this? A job guarantee has many positive characteristics, which I have mentioned previously.

• It gives money to those in need, not to everyone.
• It provides a decent standard of living, not a pittance, perhaps $25,000 per year, plus benefits.
• It automatically sets a substantial floor for wages, working conditions, and benefits for the private economy.
• It is automatically and strongly counter-cyclical, increasing when the private economy goes into recession.
• It naturally replaces much of the current poverty infrastructure.
• It provides services, insofar as the job holders are doing something productive.
• One could imagine a central job board, used internally by government projects and prospective employees, but also by private employers to make better offers to those employed in the program.

I would envision the job guarantee system as offering a full range of government-run work, from NASA engineering to street sweeping. Employees could be fired at will, demoted from better jobs to worse jobs, (or promoted), as their talents, behavior, and willingness to move merit. If they crash out of the simplest jobs, like litter pickup and invasive plant clearing, they could be offered a basic income for no work (at the UBI level of $12,000 per year- plus health insurance, which would be universal anyway). The conditions would be that they stay out of jail, off the streets, and out of drug and mental facilities. If they crash out of that, they would be faced with more paternalistic options of case worker intervention, food vouchers, group home living, having their finances handled by a trustee, etc. At this level, work requirements would not exist anymore, or lifetime caps, etc.

One of the most positive aspects of communism was its guarantee of work. The work may not have been efficient, but it gave everyone a place in society, and a paycheck, and benefits. It is one of the few aspects of communism worth emulating, if it can be made to work alongside a higher-paying, innovative, and well-regulated private economy.

Combining a job guarantee, cash benefits, and more controlled programs, a spectrum of appropriate options would be available at all levels of society to lift everyone out of poverty, to intervene where needed, to provide maximal freedom, and to use public money efficiently. Whether job guarantee holders actually accomplish anything is secondary- the major benefits occur regardless. Yet as noted above, there is a great, indeed infinite need, for work. For example, child care up to school age, and elder care (given some certification of disability and need for care) could qualify for one job guarantee position, regardless of the status of other people in the household. This would help families cope with services that are so important to society at large.

• Bitcoin is absurd and wasteful.
• Could gerrymandering get even worse?
• Fixing refrigeration is the top climate change solution.
• Reich on paying the rich to "fund" the government. (Which is quite unnecessary.)
• A recession is on the way.
• Collusion.
• The real crisis is climate change. And a fascist president.

Not a crisis

Not a crisis

Caught in a Lie

Why does our political system spend decades stuck in states of denial?

I am enjoying an infinitely long podcast about the Civil War. One of its lessons, and of that period in history generally, is that incredibly large numbers of people can, for decades, believe convenient or politically motivated falsehoods. The gulf between the Declaration of Independence and the reality of slavery was there for all to see, particularly in the South. But it took a century for the issue equality to come to a head in the war, and then another century for it to come to a head again in the civil rights movement. And we are far from done with it now.

Decades were spent explaining away the obvious with justifications ranging from the nakedly instinctive and economic to the scientific and religious, that people are not after all created (legally, politically) equal, and even if they were, to the victor belong the slaves. It took a national movement of abolition, and particularly the book Uncle Tom's Cabin, to rub people's noses in the fundamental contradiction and injustice. And even then, half the country, full of perfectly respectable and intelligent people, fought a bitter war to escape the truth of the matter. It is appalling to look back at the time spent, and the lives wasted and lost, in this process of slow awakening.

"You can fool all the people some of the time and some of the people all the time, but you cannot fool all the people all the time." - attributed to Abraham Lincoln, but of uncertain provenance.

Smoking is another, smaller, example. The tobacco companies didn't really need to work very hard to convince people that smoking was safe, since most of the country was addicted to nicotine and didn't want to know the truth. But a concerted campaign of disinformation and unconscious conditioning, through floods of advertising and copious product placements lulled the addicts to somnolence, while continuing to draw in new generations of "rebellious" young customers.

Now our politics seem to be in another decades-long process of denial and division. The racial issue still lives as part of the divide, as does resurgent economic inequality, but more important is the environmental issue. The earth is in peril, and it is our own greed and ignorance that put it there. Half of our political system is dedicated to denial, which is getting more flagrant with each election. Perhaps, like the period before the Civil War, the more endangered one's comfortable lies are, the more vociferously, even militantly, they are defended. At this point we have a chief executive who lies maliciously about everything, as a matter of habit, and we hardly bat an eye. Particularly telling is his advice to men accused of sexual assault - "You have to deny everything"- advocating perjury.

Interestingly, the parties (though not the regions) responsible for these epochs of lying and denial have switched dramatically. The Republican party brought us the clarity of abolition, union, and Lincoln. The exodus of Democrats from congress during the Civil War allowed a fresh wind of progressive legislation, such as fiat money, income tax, and the land grant education system. Now, Republicans are the party of the South and of vested priviledge- racial, economic, and patriarchial. It is for all these fossilized interests that Republicans maintain a policy of denial, shamelessly serving the wealthy and the industries they run, like the Koch conglomerate, and the coal and oil companies. Lies serve as a defense against rational policy and democracy. They serve as a screen against understanding and care for the future by the electorate- especially the vaunted "base", of which it is difficult to say whether it is predominated by ignorance, cynicism, meanness, or worse.

In the Civil War era, the purveyors of lies were mostly conservative social habits and structures that served the powerful- the dominance of the planter elite and the religions which supported them unstintingly. Power ruled nakedly, over slaves, but also over the social system more generally, including its media. Power is again, obviously, the problem today. It is those in power who do not want change, do not want to make the economic system more equal or sacrifice even a pittance for the future of the biosphere. The Supreme Court has pronounced money to be speech, which means the dominance of corporations and the rich. History is a litany of struggle for power between the rich and the poor, conducted by various mythologies and lies. The left has its problems with truth as well, particularly in its Marxist incarnation, which went so far as to claim itself as a science of history, economics, and social justice. Naturally, the lying reached an appalling crescendo when the Marxists gained maximum power under Stalin. Whatever the party, the powerful have the most to hide, and engage in the most habitual and cynical lying to keep it hidden, sometimes via blatant lying, but more often in plain sight via elaborate ideologies of other-denigration and self-justification.

But there are also technological issues. An internet that was supposed to spread truth and information is instead ridden with button-pushing trolls and corporate propaganda, while killing off the professionally edited media. Putin's Russia has refined disinformation to an alarmingly precise science, and Trump has been their most attentive student. Between them and the FOX propaganda channel, Rush Limbaugh and colleagues, independent thought hardly stands a chance. One characteristic of the lying is their loud claims of truth, such as the slogan "Fair and Balanced", and the reflexive denigration of any source of thoughtfully investigated and edited information as "fake news". Unbeknownst to the innocent, what were previously channels of information have transformed into fronts of warfare- class warfare.

"In science, if you stand up and say something you know is not true, that is a career-ending move. It used to be that way in politics." -Bill Foster, physicist and member of Congress 

• Tom Tomorrow on fake news.
• Ten commandments may need a minor update.
• Our system has a problem with minorities.
• Republican reminiscences.
• Weaponizing the dollar.. would be much more effective if we had friends.
• Defunding the IRS for complete impunity... of the powerful.
• "In 2014, an international team of biologists estimated that, in the past 35 years, the abundance of invertebrates such as beetles and bees had decreased by 45 percent."

Arthur Kornberg

Notes on a great biochemist.

One thing that has made America great is our biomedical research establishment. Over the second half of the 20th century, the US created a uniquely effective set of funding institutions, and grew a large cadre of scientists who have led the world in the adventure of figuring out what makes us tick. Biology, at the molecular level, is an alien technology, based on chemistry, yes, but otherwise utterly unlike to any technology we have developed or been previously familiar with. It has taken decades to get to our current incomplete level of knowledge, and it will take decades more to unravel such complex processes as the detailed genetics of early development, or of schizophrenia, or the nature of consciousness.

Yes, it has led to biotechnology and growing prospects for improved medicine. But the historical significance of this epoch lies in the knowledge gained, of finding and exploring a vast and ancient new world. One of the leading scientists of the early days of enzymology and molecular biology was Arthur Kornberg, whom I learned from through his textbook on DNA replication. It was a model of clarity and focus, filled with apt illustrations. It was the rare textbook that didn't try to cover everything, and thus could treat its proper subject with loving care and detail.

The cover depicts a micrograph of replicating viral DNA, the new duplex forming in a loop in the middle, and much of the DNA covered with proteins that help the process along.

Kornberg was the subject of both an autobiography and a biography / hagiography. The latter was written by a fellow scientist, but steers only gingerly into the science, sticking mostly to the story of Kornberg's life, times, and relationships. And what science there is is rather biased. For example, several years after the Watson-Crick model of DNA came out, Kornberg's lab developed a compositional assay for their short snippets of replicated DNA made in the test tube, and deduced that replication was anti-parallel. That is, one DNA strand of the duplex runs in one direction, chemically speaking, while the other strand runs in the opposite direction. This is portrayed as a discovery, for which Crick was very grateful in correspondence. But the Watson-Crick model had already posited the anti-parallel nature of DNA as an intrinsic property, and the model had been richly supported by that point, so Kornberg's work was at best confirmatory. Crick was just being polite.

An interesting side-light is that this epoch in biochemistry and molecular biology was substantially enabled by the scientific and technological breakthroughs of the Manhattan project and nuclear physics. It was isotopes like phosphorous-32 and sulphur-35 that allowed far more sensitive assays for nucleic acids than ever before, allowing tiny amounts of enzyme to be tracked down. DNA sequencing began with ladders of size-selected nucleic acids digested chemically from longer molecules and visualized by X-ray film thanks to radioactive P-32 enzymatically attached to the ends.

Early days, Arthur (right) and his wife Sylvie, who played a central, though unheralded, role in his laboratory and work.

One irony of the story is that Kornberg was so stuck in his system that he was resistant to the new fields it gave birth to, i.e. molecular biology. In his prime, he ran a factory of a lab, indeed a whole department, (first at Washington University, St Louis, then at Stanford), devoted to finding and characterizing the enzymes of nucleic acid synthesis and particularly DNA replication. These groups purified enzymes on a massive scale from E. coli cells, which were broken open, filtered, and then passed over various charge-selective and size-selective media, in extensive multi-step protocols to come out at the end with more or less pure single proteins or complexes of proteins. Some of these enzymes turned out to be extremely useful in biotechnology, for the cutting, copying, ligating, repairing of DNA, etc. As time went on, scientists realized that enzymology, while an important part of understanding how things work in cells, is usefully supplemented by the many methods of genetics and cell biology, which resulted in a hybrid field called molecular biology.

For example, Kornberg's Nobel prize was won, and name was made, on DNA polymerase I from E. coli. This enzyme replicates DNA, but not very well. It tends to fall off a lot. Some years later, another lab created a mutant E. coli strain that lacked the gene encoding this enzyme. And lo and behold, the cells were fine. They reproduced and replicated their DNA. It turned out that E. coli encodes five DNA polymerases, of which DNA polymerase I is among the least important- a repair enzyme that finishes gaps and other problems in the duplex, leaving the bulk of replication to other, far more ornate enzyme complexes. It was genetics that provided the critical clues in this story, showing how an integrated and diverse approach to research questions provides more productive answers.

Master of his realm, in later years, with fruit-themed computer.

Kornberg ran a family-style system in his departments. He had drawn most of its members (at Stanford) from among his own post-docs and students. It had communistic, but also authoritarian, elements. Space was shared, reagents were shared, even funding was shared- something unheard of today. At the same time, Kornberg had the last word on everything and was a ferocious micromanager. Researchers who wanted to make a name for themselves and build their own empires had to leave. But Kornberg picked well, and many of his colleagues had very influential careers, especially Paul Berg, a pioneer of recombinant DNA methods. Kornberg's strong dedication to his field and his system- his sense of meaning and purpose- was a precondition of success, communicating itself to all around him and fostering an unquestioned work ethic and community ethic. The Stanford department was legendary in its day, and inspired many other researchers to become enzymologists and use the laborious methods of protein purification to get their hands on the very gears and cogs of life.

• Steve McCarroll on contemporary biochemistry.
• Reformation and enlightenment as coincidences.
• Failure to deal with white collar crime may have led to a white collar criminal in the White House.
• Racism, yes.
• Who could have expected any better?
• The Chicago school, now for banking regulation?
• How much of military spending is waste, even on its own terms?
• Secular stagnation? Hogwash. Response, Wiki page. Response.
• MeToo and Kavanaugh. And perjury.

Green Power

California's open political structure opens the opportunity for the Green party to create a revolution.

A recent op-ed in the local paper by a Republican party official complained about California's open primary system. This system runs primaries and general elections without regard to party affiliation. The top two finishers in the primary run against each other in the general election. In California, this has resulted in many state-wide races being contested between two Democrats. The Republican party no longer has a lock on one position on the general election ballot as they used to, and this naturally rankles. The editorialist complained pathetically about lack of diversity (of all things!), and how the choice between two Democrats was so limited. It was whining at its most exquisite.

California has frequently been in the political vanguard, whether in tax revolts or in progressive climate change policy. The 60s were headquartered here. California has put redistricting on a non-partisan basis. The open primary system has been a dramatic success, giving the best two candidates a hearing before the voters in the general election, and reducing partisanship and cronyism in the state. One side benefit is that voters can register with a minor party without the penalty of being locked out of the key primary races, which are no longer parochial, but open to all. This new political landscape (which was the beneficent and ironic gift of Arnold Schwartzenegger) could lead to another progressive advance, in the form of a revitalized Green party.

Trends in party affiliation in California. Greens come in at 0.62%- currently negligible.

The Democratic regime in California has not been a bad thing on the whole. Under Jerry Brown, who operates as a centrist, the drama surrounding budget battles and other fringe issues has been sharply reduced. Except for the pension crisis, the state has been quite well run, if inefficient. Advances in climate change regulation, marajuana legalization, gun control, and formal resistance to the Trump administration are generally appreciated. Trump is reviled. Education and infrastructure funding remain dreadful. There is little stomach in the state for a return of Republicans as the opposition, (they are now legislatively locked out of veto power), which would bring back endless bickering and corrupt dealing. There is, however, room for less corporatism and more progressivism, which is what a stronger Green party could provide.

The Green party currently is not much healthier than the Republican party, unfortunately. In California, it fields a grand total of 60 office holders, none of which are statewide. Its web sites and organization seem moribund. Due to the two-party structure at the national level, it is unthinkable to support it in presidential races, where it would be a spoiler to benefit Republicans. But with open primaries in California, the party could cultivate a state-wide program and candidates, while vowing to back the Democratic party (or whichever party is more aligned with Green objectives) in races that are significantly contested by Republicans, which is to say, effectively support the left. That would provide a solid platform for activism within the state, building the movement and the party.

Each non-presidential race would have to be carefully evaluated for whether the participation of a Green candidate would raise the chances of Republican / Conservative victory significantly. In primaries, this is likely be a negligible risk as things stand. At least one Democrat will always win in non-rural districts. For the general election, if a Green candidate is not running, Greens would support the Democratic candidate, or whichever one most agreed with the Green agenda. This would make for a sort of mature, parliamentary-style politics, where coalitions are assembled in response to conditions.

Oddly, however, the Green party is officially against the open primary system, mistakenly thinking that the loss of a coveted (though pointless) automatic spot on the general election ballot outweighs the decisive gain of flexibility for their voters and sympathizers in the primary election. They want something still better, like proportional representation, logic that to me seems maybe nice in theory, but self-defeating and irrelevant in practice. Worse, the national Green party is a disaster, indeed a toxic blight on the left, pushing its presidential candidate in the teeth of all logic and experience. That is no way to succeed.

The Republican editorialist bemoaned the lack of competing perspectives and arguments in California politics. But the voters have decisively rejected the Republican program of meanness, business cronyism, labor expoitation, environmental degradation, and xenophobia, which has only become more extreme and blatant on the national level. Maybe the discussion that voters in the state really want is one between Democrats and those who want progress to go even faster- toward single payer health care, faster de-carbonization of the economy, more effective business (and internet) regulation, and more balanced housing and transportation growth, among many other issues. The climate is shifting.

• Change your party registration right now!
• We are choking on zoning.
• CO2 is not only rising, but rising faster than ever.

Economics is All About Redistribution

And new economies need new methods of redistribution.

"Redistributionist" is a dirty word for the right, like gun-grabber, bleeding heart, tree hugger, and statist. Yet we are currently treated to the spectacle of a Republican congress redistributing income, foregone taxes, and wealth to the tune of trillions, upwards towards the wealthy and well-connected. What does repealing the estate tax have to do with putting manufacturing workers back to work, or solving the opioid crisis? Nothing, naturally.

In a state of nature, everyone has a job, which is to wrest bare sustenance from a rich, but complex and mystifying world. No one is "employed", since everyone is self-employed. And if you or the small family you rely on fail in that task, the end comes relentlessly. This represents the primitive "job guarantee". Everyone has a job, and failure to do that job is penalized harshly.

A developed economy has a different relation to work. Most people still live by their labor and wits, but there is so much wealth and technological prowess that most people's work is completely dispensible. Whether we have lawyers, rock bands, and toothpaste is a matter of significant, but not existential, importance. Even the food production system is so broadly based that no single person's work is existentially important to anyone, even themselves, given a modest safety net. And this system can support large numbers of people with no jobs at all, with ease. Yet income remains tied to work, despite the fact that we are moving to a future where the ratio of work needed to labor available is plunging, taking the labor market and incomes with it.

Who runs this system? Whom does it serve?

The trajectory of all this is quite clear. Those with wealth receive the benefits of industrial productivity, which is increasingly capital-based rather than labor-based. Those with only labor to offer, even of a specialized and educated nature, get increasingly locked out of the income / redistribution system. Whether this will lead to a Keynesian crisis of lack of overall income and spending is not clear. The rich spend much less than their income, as witnessed in the recent revelations of overseas tax shelters holding trillions. But so far, the Fed and other institutions (here federal deficits play a critical role) are working mightily to keep the system churning, despite the extensive replacement of good jobs with bad jobs, and consequent declining worker pay (relative to productivity). The system is no longer working- labor is no longer an effective way to keep everyone employed and paid in a manner that befits an advanced society as productive as ours.

This is what the current class war is all about. Republicans are shamelessly doubling down against the very voters who thought they were supporting a better deal on jobs and a restoration of the middle class. Rather, this administration is pulling every available lever to entrench the rich/capital and pull the rug out from under workers, leaving them even more powerless and destitute than before. Who would have thought?

What should we be doing instead? Some propose a basic income, whereby every citizen gets a small income, merely for existing. This neatly cuts the connection between labor and income, but has many problems. First, it is not a decent income, but extremely minimal. So it ends up being miserable welfare, at best, for the poor, and an unnecessary gift to the rich. Second, it does not provide the reciprocal benefits to society, or the individual, that work does. To let so much personal energy go to waste, paying people to do nothing, presents both a moral hazard an an enormous social loss. We can do much better.

Social Security could be cited as an example of a very successful basic income, given to all. But it is explicitly tied to previous work, and serves a specific social function of supporting those who can not work any more. Public services like roads, public buildings, scientific research, and the like are also good examples of implicit income given to all, and surely health care should come under the same universal service category. But income for working-age people represents something quite different- it is the source of their freedom, and represents their service to the larger society. We need to find a way to preserve and enhance those relations while gradually disentangling it from the semi-feudal work-as-labor model in capitalism.

Basically, people should be paid for a wider range of activities. For example, voting could be paid. Serving on juries could be paid, far better than currently. Sending children to school could be paid. Positive social activities should be paid for, not just classed as volunteer activities or duties. Perhaps the biggest opportunity is in the non-profit sector. If the government funded non-profits on a broad basis, while enforcing governance, management, and mission rules, we could end up with endless opportunities for public service and fairly paid work.

Where would the money for all this come from? The main actor in the economic system is, to be frank, the government, not the private sector. The government prints the money, runs the central bank, and has first rights to production such as defense spending, police functions, and other necessities (which becomes particularly clear in war-time). The fact that capitalist enterprise and competition has been a beneficial and innovative way to organize the private economy to provide the bulk of most people's needs does not mean this will always be the case or needs to be the sole form of work and income. As mentioned above, capital is concentrating and the need for labor is gradually uncoupling from the need to produce goods. But it shouldn't be uncoupled from doing social good. Indeed, the capitalist system has led to enormous social harm, and seems to have led to an appalling revolution in values, putting the greediest and most predatory people in the most successful positions.

Thanks to mind-boggling political and intellectual corruption by which they have gained power through a supposedly populist political movement, these arch-capitalists are right now trying to entrench their feudal powers over workers by relieving themselves of taxes, by empowering corporations to rule more of our lives, enhancing the legal immunities of corporations and relieving them of any public purpose (especially in the case of media companies), by weakening our democracy and the state, and by keeping the labor market weak and workers dependent on the private sector for income. It is the last gasp of a system that will either turn towards an even uglier feudalism, or be turned back and regulated into a progressively smaller share of our economic, social, and political lives.

• Paradise papers and the so-called rule of law.
• But why shelter your riches from taxes when you've got a congressman in your pocket?
• And for that matter, why not appoint a tax evasion expert to head the IRS?
• "The United States, he noted, currently has one of the highest levels of inequality in the history of the world."
• Which Republicans want to make hereditary.

The Rich Get Richer

Inequality is immoral and unjust: Review of "The Anatomy of Inequality: Its Social and Economic Origins- and Solutions", by Per Molander

Second only to global warming and our vast debt to the future of the biosphere, inequality is the most pressing issue of the day. The two issues incidentally interact, since the slide towards inequality has correlated with a glaring lack of care and empathy by the upper classes, not only towards their fellow citizens and humans, but towards all other life on the planet.

This book is the third of a powerful triumvarate of recent analyses of economic inequality, and of them perhaps the most profound. Its point is very simple- that inequality is absolutely intrinsic to our socio-economic relations, and proceeds naturally to extreme levels unless stopped by special political or social interventions. Inequality is not fair, it is not reasonable, just, or virtuous, but rather is a mechanistic and inexorable consequence of game theory, by which, as the title and the saying have it, the rich get richer.

Life is full of negotiations- with family members, with sellers of products, with employers. Not all negotiations are obvious, but when we are faced with a difficult choice, there is probably some kind of negotiation at the heart of it, influenced by other people. A paradigmatic negotiation is for a job. A seeker has labor to offer, and an employer has money to offer in return. What is the employer's need for labor vs the seeker's need for money? Already one can see a deep asymmetry at work. Add selective secrecy that hides the pay of other employees, an entire department of people devoted to getting the best deal for the company, and a social hierarchy based on seniority, and the result is clear- a lot of underpaid employees.

In negotiations, the more powerful / richer party is substantially advantaged. The employer may not only have the advantages above, but also have political influence to engineer other non-market advantages, from H1B visas to union-busting legislation and regulation (or non-regulation). This process was far more stark historically, obviously, as kings and other nobles gave themselves ownership of all the land, and made peasants into serfs. The advantages of a strong pre-existing negotiating position are so persistant that, in the natural state of affairs, inequality inexorably goes towards infinity, with the only limit being the dominant party's interest in keeping the whole iniquitous system going. As Molander puts it:

"There is no reason to believe that people in hunter-gatherer cultures have a different constitution or capacity to exert moral pressure that would curb the power of a ruling class. These societies are egalitarian quite simply because there is very little room for inequality when a society is close to the subsitance level. In societies with a larger suplus of goods, what restricts the power imbalance between the affluent and the impoverished is the former's interest in keeping the latter alive and reasonably fit for work."

Herein lies the two-income trap, the stagnation of wages over the last few decades, and the increasing share of wealth and income going to capital in the US. It is a mechanism analogous to natural selection, both of which amplify the smallest differences (or vagaries of fate and luck) into existential propositions. In any negotiation about economic issues, the person with a bigger cushion of money is better off, even when all other aspects are identical. Who needs the money more and will give in first? Clearly the person with less of it. Who is better able to take investment risks, and get higher long-term returns, even at the expense of volatility? Again, the one with more money. Having money, whatever its source, is like having the wind at your back, giving rise in turn to more money, higher status, more opportunities, and better bargaining positions vs others, and thus widening inequality.

While we in this new gilded age are nowhere near medieval serfdom, we hardly exist in a fair system, either. Take the example of Bill Gates. Smarter and more productive than your average person? Yes. But 80 billion times more? Probably not. His (borrowed) operating system was, even at the time, hardly the best available. But he parlayed a lucky industry paradigm and a strong but bumbling partner- IBM- into the world's biggest fortune.

Now, for all the money he is giving away, he can't help but make billions more each year from investments. Can you or I stand back and have billions come in the door? Probably not. Such passive income, derived not from investment risk (given the wealth backing him up, there is zero risk to practically any financial action) or from accumen (which can be purchased), is almost purely parasitic on the labors of everyone else in society. Add in the ability to bequeath this horde to his children, (think Paris Hilton, and the Republican obsession to eliminate estate taxes entirely), or to use it to derange our political and social system (think Kochs, or Mercers) and the corrosive nature of this concentrated and unearned wealth is obvious.

Historically, there have been several solutions to this ratchet of inquality. Catastrophes, such as plagues and wars, have been great levelers. Our own Depression, World War, and Cold War era was when many large fortunes dissolved and the stage set for several decades of low inequality and general prosperity. But in normal times, the ratchet of wealth accumulation runs inexorably and unfairly. Molander mentions the Jewish tradition of a debt Jubilee, which reset land ownership and debt bondage in Israel every 50 years. Outright revolution is another method, such as experienced in France and Russia, or the various democratic / demagogic episodes in Greek history. Or on a more modest scale, land reform, which shares out what was previously held by large landowners.

Molander notes that constitutions and social constracts are of limited help against this natural process of differentiation, which in his engineering terms is a positive feedback. We need more dynamic, negative feedback social mechanisms to resolve this fundamental economic and social injustice. The end of his book is taken up with peans to the social democracy of his native Scandinavia. But one problem is that social cohesiveness is both a product of, and a precondition for, substantial economic equality. We can not wait around for the number of social democrats in our national instutions to exceed one. As previously discussed, we in the US used to have, around our founding, the conditions of rough equality, which led in large part to the enlightened consitution and unwritten institutions we cherish and have benifitted by so much.

But now we don't, and our conditions, barring some unwelcome catastrophe, are trending strongly in the wrong direction. We need a new institutional structure that fights systematically against the natural ratchet of unequality. This would be something like the Federal Reserve, which has numerical targets that it is structured to hit in its management of the macroeconomy. For the Fed, this is the interest rate, of 2%, plus other goals of financial stability and (a very distant third) high employment. The Department of Economic Justice would target a basket of goals, including the Gini index (about 0.3), and employment (an unemplyment rate of nor more than 4%, or 10% in broad measures), and wealth distribution (no quintile owning more than the twice the next-lower quintile).

There are many tools that can be used to hit these targets. But it is significant at the outset that explicit, ambitious, and sustaintable targets be set. Some inequality is a good thing, fostering human development, work, and innovation. But too much degrades economic prosperity, and far more importantly, our social and political environment. The Department of Economic Justice may not have direct powers, perhaps only to report on conditions and propose legislation and regulation. Or it may have regulatory powers, such as for antitrust and fee or tax-based regulation of the financial industry. There are many available tools, from the obvious like taxing high incomes and taxing wealth directly, to financial transaction taxes, raising minimum wages, dramatically increasing public goods and infrastructure, and providing a job guarantee, which help raise the floor of economic conditions.

Molander provides a crucial service in reframing the inequality phenomenon as one that is natural and inexorable, but also mindless and unjust. The Galts of the world have very rarely invented the steel on which their fortunes rest, let alone the fortunes which their fortunes in turn make on a passive basis. We do not have to collectively put up with it.

• Object lesson in the brutality of power inequality, in even small amounts.
• Workers are underpaid.. what else is news?
• Some great signs.
• Honestly, are we capable of self-government?
• News from Afghanistan, cont.: corruption rampant.
• Reflections on truth.
• Stiglitz on a modern welfare (or, perhaps, fair) state.
• The last mask is off. The tax give-aways go to the rich and to Trump, not to his voters. But maybe they don't care.
• Which makes Trump "perfect".

For Whom Shall the Robots Work?

When robots do everything, will we have work? Will we have income? A review of Martin Ford's "Rise of the Robots".

No one knows when it is coming, but eventually, machines will do everything we regard as work. Already some very advanced activities like driving cars and translating languages are done by machine, sometimes quite well. Manufacturing is increasingly automated, and computers have been coming for white collar jobs as well. Indeed, by Martin Ford's telling, technological displacement has already had a dramatic effect on the US labor market, slowing job growth, concentrating economic power in a few relatively small high-tech companies, and de-skilling many other jobs. His book is about the future, when artificial intelligence becomes realistic, and machines can do it all.

Leaving aside the question of whether we will be able to control these armies of robots once they reach AI, sentience, the singularity ... whatever one wishes to call it, a more immediate question is how the economic system should be (re-)organized. Up till now, humans have had to earn their bread by the sweat of their brow. No economic system has successfully decoupled effort in work (or predation / warfare / ideological parasitism) from income and sustainance. The communists tried, and what a hell that turned out to be. But Marx may only have been premature, not wrong, in predicting that the capitalist system would eventually lead to both incredible prosperity and incredible concentration of wealth.

Ford offers an interesting aside about capitalism, (and he should know, having run a software company), that capitalists hate employees. For all the HR happy talk and team this and relationship that, every employee is an enormous cost drain. Salary is just the start- there are benefits, office space, liability for all sorts of personal problems, and the unpredictability of their quitting and taking all their training and knowledge with them. They are hateful, and tolerated only because, and insofar as, they are absolutely necessary.

At any rate, the incentives, whether personal or cooly economic, are clear. And the trends in wealth and income are likewise clear, that employment is more precarious and less well paid (at the median), while income and wealth have concentrated strongly upward, due to all sorts of reasons, including rightward politics, off-shoring, and dramatic technological invasion of many forms of work. (Indeed, off-shoring is but a prelude to automation, for the typical low-skill form of work.) There is little doubt that, left to its own devices(!), our capitalist system will become ever more concentrated, with fewer companies running more technology and fewer employees to produce everything we need.

What happens then? The macroeconomic problem is that if everyone is unemployed, no one (except the 0.00001%) will be able to buy anything. While the provision of all our necessities by way of hopefully docile machines is not a bad thing, indeed the fulfillment of a much-imagined dream of humanity, some technical problems do arise; of which we can already see the glimmerings in our current society. Without the mass production lines and other requirements for armies of labor that democratized the US economy in the mid-20th century, we may be heading in the direction, not only of Thomas Piketty's relatively wealth-heavy unequal society of financial capital, but towards a degree of concentration we have not seen lately outside of the most fabulous African kleptocracies.

What we need is a fundamental rethinking of the connection between income and work, and the role of capital and capitalists. The real wealth of our society is an ever-accumulating inheritance of technology and knowledge that was built in common by many people. Whether some clever entrepreneur can leverage that inheritance into a ripping business model while employing virtually no actual humans should not entirely dictate the distribution of wealth. As Ford puts it:

"Today's computer technology exists in some measure because millions of middle-class taxpayers supported federal funding for basic research in the decades following World War II. We can be reasonably certain that those taxpayers offered their support in the expectation that the fruits of that research would create a more prosperous future for their children and grandchildren. Yet, the trends we looked at in the last chapter suggest we are headed toward a very different outcome. Beyond the basic moral question of whether a tiny elite should be able to, in effect, capture ownership of society's accumulated technological capital, there are also practical issues regarding the overall health of an economy in which income inequality becomes too extreme."

As a solution, Ford suggests the provision of a basic income for all citizens. This would start very minimally, at perhaps $10,000 per year, and perhaps be raised as the policy develops and the available wealth increase. He states that this could be funded relatively easily from existing poverty programs, and would at a stroke eliminate poverty. It is a very libertarian idea, beloved by Milton Freidman, (in the form of negative income tax), and also emphasizes freedom for all citizens to do as they like with this money. Ford also beings up the quite basic principle that in a new, capital-intensive regime, we should be prepared to tax labor less and tax capital more. But he makes no specific suggestions in this direction ... one gets the impression that it cuts a little too close to home.

This is the part of the book where I part company, for several reasons. Firstly, I think work is a fundamental human good and even right. It is important for us to have larger purposes and organize ourselves corporately (in a broad sense) to carry them out. It is also highly beneficial for people to be paid for positive contributions they make to society. In contrast, the pathology surrounding lives spent on unearned public support are well-known. Secondly, the decline of employment in the capitalist economy has the perverse effect of weakening the labor market and dis-empowering workers, who must scramble for the fewer remaining jobs, accepting lower pay and worse conditions. Setting up a new system to compete at a frankly miserable sub-poverty level does little to correct this dynamic. Thirdly, I think there is plenty of work to be done, even if robots do everything we dislike doing. The scope for non-profit work, for environmental beautification, for social betterment, elder care, education, and entertainment is simply infinite. The only question is whether we can devise a social mechanism to carry it out.

This leads to the concept of a job guarantee. The government would provide paying work to anyone willing to participate in socially beneficial tasks. These would be real, well-paying jobs, geared to pay less than private market rates, (or whatever we deem appropriate as the floor for a middle class existence), but quite a bit more than basic support levels for those who do not work at all. Under this mechanism, basic income is not wasted on those who have better paying jobs. Nor are the truly needy left to fend for themselves on sub-poverty incomes and no other programs of practical support. While the private market pays for any kind of profitable work no matter how socially negative, guaranteed jobs would be collectively devised to have a positive social impact- that would be their only rationale. And most importantly, they would harness and cultivate the human work ethic towards social goals, which I think is a more socially and spiritually sustainable economic system, in a post industrial, even post-work, age.

The problem with a job guarantee, obviously, is the opportunity for corruption and mismanagement, when the market discipline is lifted in favor of state-based decision making. Communist states have not provided the best track record of public interest employment, though there have been bright spots. In the US, a vast sub-economy of nonprofit enterprises and volunteering organizations provides one basis of hope and perhaps a mechanism of expansion. The government could take a set of new taxes on wealth, high incomes, fossil fuels, and financial transactions, and distribute such funds to public interest non-profit organizations, including ones that operate internationally. It is a sector of our economy that merits growth and has the organizational capacity to absorb both money and workers that are otherwise slack.

Additionally, of course, many wholly public projects deserve resources, from infrastructure to health care to combatting climate change. We have enormous public good needs that are going unaddressed. The governmental sector has shown good management in many instances, such as in the research sector, medicare, and social security. Competitive grant systems are a model of efficient resource allocation, and could put some of the resources of a full job guarantee to good use, perhaps using layperson as well as expert review panels. Improving public management is itself a field for development as part of the expanded public sector that a job guarantee would create.

In an interesting digression, Ford remarks on the curious case of Japan. Japan has undergone a demographic shift to an aged society. It has been predicted that the number of jobs in health care and elder care would boom, and that the society would have to import workers to do all the work. But that hasn't happened. In fact, Japan has been in a decades-long deflationary recession featuring, if anything, under-employment as the rule, exemplified by "freeters" who stay at home with their parents far into adulthood. What happened? It is another Keynesian parable, since the elderly are poor consumers. For all the needs that one could imagine, few of them materialize because the income of the elderly, and their propensity to spend, are both low.

The labor participation rate in the US.

Our deflationary decade, with declining labor participation rates, indicates that we are heading in the same direction. We need to find a way to both mitigate the phenomenal concentration of wealth that is destroying our political system and economy, and to create a mechanism that puts money into the hands of a sustainable middle class- one that does not rely on the diminishing capitalist notions of employment and continue down the road of techno-feudalism, but which enhances our lives individually and collectively.

• For instance, we can afford a post office.
• Poverty is permanently damaging.
• Welfare and public goods feed economic growth.
• Do we have a perpetual savings glut?
• Bill Mitchell on labor-capital relations. Such as they are.
• Panopticon and the modern office.
• Bernanke: I was pwned. Krugman: ... and anyway, the deficits were more important than the Fed bailouts.
• We are, typically, fools.
• ... to believe that CEO pay relates to performance.
• Bill Mitchell on why banks are pushing for higher interest rates. Hint: it is not to help the rest of us.
• Further map of Taliban control in Afghanistan. The long-term institutional failure of short-term engagement.

Sociomolecularbiology

Society affects gene expression and development, and genes contribute to social traits and behavior.

Is it any news that we are biological beings? That all aspects of our being, from toenails to theology, are biologically based? That was the premise of sociobiology, the science of the behavior and evolution of social organisms. Of which we are one. Unfortunately, the smell of eugenics was still too strong in the political atmosphere to allow thinking about how our genes affect our behavior, so that splash by E.O. Wilson died down and the science went on by other names.

That work has found, among other things, many connections between our psychology and our physiology. It should be no surprise that we are profoundly affected, to the point of suicide and other forms of death, by information that first arrives to our brains. Our immune systems are sensitive to social state, as are digestion, mood, activity, etc. Hypertension is one of many long-term consequences of stress, for example. This close relationship leads to to idea that we might be able to judge happiness by objective measures, rather than exclusively by self-report. And that would open up new vistas in morality, particularly morality vis-a-vis other species.

But it goes the other way as well, as our social capacities are based on biology. Psychological traits of great complexity can run in families, and scientists are only starting to gain glimpses of genetic alterations that cause such traits and their variation. The very ability to be flexible, to learn and adapt, is itself obviously of genetic origin. The question, typically, is how much people differ in significant social traits and how much we should care about that. We pride ourselves on meritocratic systems of education, business, and government that weed, select, and reward those who are gifted, who also align with and master the social system. But are we just rewarding something that the persons themselves had little to do with, just as criminals typically have little responsibility for their genetic or social deprivations, or actors for their looks? We may be, but reward we must, as a sociological necessity, if we want societies to benefit from good rather than bad talents.

Is it also an evolutionary necessity? Should those who succeed in the existing social system be rewarded with more reproduction? Typically we do not and should not have sufficient confidence in the universality or durability of our social system to make that case in its most brutal, eugenic sense. However, we should not be blind to the genetic underpinnings of social success and all its consequences. For example, the trend toward intellectual atheism that is so fervently touted in other areas of this blog fights a rate-dependent battle against the higher reproductive success as well as intellectual insularity of religious populations. What is the deconversion rate compared to the biological and ideological reproduction rate? Is religiosity a positive trait for humans? How much to we care about our evolutionary trajectory, a path we are on whether we are conscious of it or not?

Anyhow, as an example of the genetic implications of sociality, a recent paper described a gross increase in genetic complexity that accompanied the social evolution of bees. They found a measurable correlation between social complexity and gene regulatory complexity, which is a step in addressing the question of the interrelation of genes and behavior, in general.

Bees come in many social levels, from solitary to "eusocial", a term the E. O. Wilson made up to describe animals that are not  just polite and social as we and many other animals are, but behave as super-organisms, with genetically determined castes with division of labor, and restriction of reproduction to a small subset of those castes. The members of such a collective have no independent existence, die when the hive dies, and are seen by evolution as a group that has group-level traits that are extensively selected for.

Phylogenetic tree of the species considered. Solitary bees are marked in blue, simple sociality in green, more advanced sociality in yellow, and full-blown eusociality on red. 

The researchers basically lined up lot of genomes, from various levels of social organization among the bees, and looked especially at promoter regions, where the primary control over gene expression happens. They found a striking increase in complexity, which is to say number of binding sites for regulatory proteins, all over the genomes of the more social species. Indeed there was a 10-to-1 bias of genes that gained promoter binding sites over those that lost sites in the more social species. This is a dramatic effect, and makes sense in terms of the "mode-switches" required on a genetic level to create castes with separate developmental and behavioral traits out of one ancestral species.

Bias found among orthologous bee genes (that is, the same between each species) between those that gained promoter regulatory sites in more social species (blue) and those that lost them (red). The X axis is not genes, but the individual regulatory proteins whose DNA-binding sites were identified.

They also found, interestingly, that the particular genes involved in these increases were not the same in different social insect lineages. They took different genetic / evolutionary routes to eusociality in detail, even though they ended up with similar properties. So this is a kind of convergent evolution that shows that group selection and the sociality it selects for did not just arise multiple times in life's history out of some kind of molecular happenstance, but is an optimal ecological solution that attracts quite a bit of selection, as we can tell by the dominance of social species, both in the insect world and in our own.

Overlap among the various social lineages of which genes showed rapid, positive evolutionary selection. The result is that there is very little overlap, indicating that there are many ways to skin the social cat.

• Termites, same story is pending.
• Sociological reflections on WD Hamilton.
• Review of Churchland, on the brain and morality.
• More on body-mind interconnections.
• What the Y chromosome says about out of Africa models.
• Do voters understand economics, from today's ideological, corporate media?
• Global warming doesn't mean more plants, it means more desert.
• Breaking up big SDI banks would be "un-American".
• Notes on currency manipulation.
• Notes on division of labor, and why technology is probably more important to the organizational structure.
• NIH talk on depression- current research status and promising developments.

Thomas Piketty: We Are Heading Into a World Where We Do Not Want to Be, Pt 2

I review Piketty's Capital in the 21st Century, second and concluding part.

Thomas Piketty's "Capital in the Twenty-First Century" is the landmark economics book of our time, not because it is especially advanced in an academic sense, but because it situates basic questions of wealth and its distribution within a very long historical perspective, raising questions about where we want to be and go as a society. The profession of economics rose to prominence in the twentieth century, when high growth was the norm and when very significant disruptions happened which had reduced the role of inherited, accumulated capital. This turns out not to be a regime that could go on forever, but rather a very unusual condition that has blinded the profession to other forms of capitalism. Through the longer history, low growth and a very heavy weight of inherited capital, combined with its strongly unequal distribution, was the norm, creating feudal or feudal-like conditions. With the Occupy movement, this realization of where we are headed hit the wider culture, but Piketty provides the data, the in-depth research, the historical perspective, and the prescription for what to do about it.

While one cause of all this inequality was, traditionally, straightforward war and seizure (think of the Norman invasion of Britain), the other reason, and why such inequality becomes so entrenched, is (apart from political and social factors) that capital always commands a price, roughly 5% (typically as land rent, in the old days). So if an economy grows at only 1% or less, which is traditional, and capital returns 5%, then capital will grow continuously, relative to the rest of the economy, in perpetuity. And indeed, the more capital one starts with, the more efficiently it can be managed and the higher return it yields.

It is a bit like a casino where the house always earns 5%. Now imagine that the doors are shut and no one can leave. All the chips eventually find their way to the house, and economic activity winds down to nothing (or solely what the house spends for its own consumption, which may be minimal) due to the immiseration of the gambling masses. If the house makes loans to its customers, this only delays the inevitable, since they those customers will never have the means to repay. In the very old days when kings ruled the land, their generosity was critical for economic functioning. If they spent all their time hording their treasure instead of distributing it, everyone else lived in abject poverty.

The only countervailing factors are disruptions like war and revolution, unusual growth either demographic or technological, or, at the terminus after very high accumulation, a slackening of the return on capital, if there is truly too much of it relative to a slackening economic activity. Marx, incidentally, realized this, and assumed that wealth increases forever, and thus requires a revolution for corrective redistribution. Hopefully we can do better. The irony is that the French revolution, by Piketty's data, did very little to redistribute wealth, even as it did so much to redistribute heads. And the Soviet revolutions revealed the significant importance that private capital does have, even if it tends to become maldistributed over time.

All this was touched on in part 1. Now that capital has recovered in the rich countries since the disruptions of the twentieth century to a roughly normal level of five to eight times annual national income, the process of its concentration is proceeding to create a rentier society where a large aristocracy of wealth controls the economic system. In addition, it bids to control the political system as well, and will inevitably reshape the social system to reflect its dominance. Piketty also points out that such inequality saps the ability of a middle class to exist, exacerbates financial instability, and reduces overall prosperity due to a lack of income among the majority of the population. One only has to compare our current time, or the Belle Epoch of France, (for example as portrayed in the novels of Marcell Proust, whose narrator is endlessly besotted with social climbing up the aristocratic ladder of his day), to the very middle class post-war era in the US to understand this remarkable contrast.

"The history of the progressive tax over the course of the twentieth century suggests that the risk of a drift toward oligarchy is real and gives little reason for optimism about where the United States is headed. Is was war that gave rise to progressive taxation, not the natural consequences of universal sufferage. The experience of France in the Belle Époque proves, if proof were needed, that no hypocrisy is too great when economic and financial elites are obliged to defend their interests- and that includes economists, who currently occupu an enviable place in the US income hierarchy. Some economists have an unfortunate tendency to defend their own private interests while implausibly claiming to champion the general interest. Although data on this are sparse, it also seems that US politicians of both parties are much wealthier than their European counterparts and in a totally different category from the average American, which might explain why they tend to confuse their own private interest with the general interest. Without a radical shock, it seems fairly likely that the current equilibrium will persist for some time. The egalitarian pioneer ideal has faded into oblivion, and the New World may be on the verse of becoming the Old Europe of the twenty-first century's globalized economy."

So, here we are, and it isn't pretty. What does Piketty propose to do about it? He has several axes to grind, actually. But above all he points out the absurdity of living in an epoch of supposedly democratic capitalism, and not knowing who owns what ... not knowing where the money is. We have an income tax that reveals in quite thorough fashion (to the government, at least) what each person's income is. But wealth? That is a completely different story. Piketty has had to piece together his academic wealth data from all sorts of odds and ends, mostly unsatisfactory. He even descends to using the Forbes list of billionaires, hardly a rigorous trove of data. So goal one is basic transparency, so that we, as citizens, can see what is going on.

Second, and drawing his most vituperative comments, are the existence of tax havens like the tiny countries of Europe, Luxembourg, Switzerland, Cyprus, etc., which parasitise on their larger neighbors by relieving them of the taxes of their richest citizens. For us in the US, the Cayman Islands come to mind, home to much of Mitt Romney's wealth. This race to the bottom of financial governance is appalling, and has no place in a just and well-run world.

Third comes the actual aim of mitigating large fortunes so that they do not grow without end to create a parasitic class of rentiers. These aims come together in his proposal of a global annual wealth tax of, say, 1%. It would require reporting and thus transparency. Indeed it would involve reporting directly from the accounts held, much as income is currently reported directly and automatically by the W2 form in the US. It would be global and thus eliminate the possibility of escape, subterfuge, and regulatory competition. And it would be substantial, stemming the natural process of feudalization that is the path we are on, not just in the US, but world-wide.

Over a generation, this tax would be roughly equivalent to a 30% estate tax, which in my view is, frankly, not enough. Piketty does recommend that this tax be progressive, rising to as high as 5% on very large fortunes. But if their return is in the 5-10% range, then their growth will only be slowed, not stemmed. The very idea that priviliged children get not only their genes from their parents, and a lifetime of educational and social advantages, but also enormous piles of money, is abhorrent as well as wasteful. If they are so talented by way of their natural advantages, why should they, of all people, not benefit society by working? As a society, our interest is in harnessing the talents of everyone to the fullest extent. Allowing substantial wealth inheritance flies completely against this principle, and isn't very healthy for the recipients of such largesse, either. As a "rights" issue, the rights of the parent to bequeth as he or she sees fit should not extend to the right of children to come into enormous estates just because they happen to be born to Thistlewaite and Ambrosia Moneybags. Society at large needs to come in between to restore some semblence of justice here. It is the epitome of what used to be called "unearned income".

"In other words, Liliane Bettencourt, who never worked a day in her life, saw her fortune grow exactly as fast as that of Bill Gates, the high-tech pioneer, whose wealth has incidentally continued to grow just a rapidly since he stopped working. Once a fortune is established, the capital grows according to a dynamic of its own, and it can continue to grow at a rapid pace for decades simply because of its size. ... Money tends to reproduce itself."

Along the way, Piketty devotes a brief chapter to the public debt crisis. As an MMT acolyte, I am not sure why he regards it as a crisis, (apart from Europe, where the confused system of not-really-sovereign debt truly is in crisis), or why paying it off is seen as good, or what point there is in calculating the net wealth position of the public sector. (Which is zero:  public assets are typically balanced by public debt). Since it prints the currency and manages the entire monetary as well as military and taxation system, the wealth of a truly sovereign state is effectively (potentially) infinite, depending only on our collective desires and productivity. Piketty's biggest beef is that the public is obliged to pay its public bondholders interest in perpetuity- money that could be better spent elsewhere, like on education- and that the rich should be paying this money in taxes rather than lending in return for continual income. Which is a fair point. He offers that a one-time wealth tax of roughly 15% would suffice to eliminate public debt entirely. Not a bad thing, I am sure, but hardly the most important policy need, other than in Europe. I guess the basic issue is whether the interest paid on public bonds is onerous or not. It has been an extra burden during the time when inflation was winding down from the high of the seventies, involving a bonus payment for inflation risk, and monetary lag. But now, with rates roughly at zero, and probably destined to remain at the inflation level for a long time to come, the net burden for truly sovereign debt seems to be relatively low.

Piketty secondly promotes the idea of higher taxes on income at the highest brackets, going back to roughly 80%. He spends quite a bit of space demonstrating that the wealth divergence in the US owes more, as yet, to the amazing income of high-level executives than to the build-up of "old money". Old money will surely come as a maturing vintage, as it has in France. These super-high incomes are not due to the super-talented artists, athletes, and inventors. No, it is (95%) the suited class of high-level corporate managers, by far: people Piketty terms "super-managers". Not because they manage particularly well- the data shows conclusively that that is not the case. But "super" from how much corporate wages and profits they have been able to capture, out from under the noses of workers on one side, and shareholders on the other. And one proven way to discourage such greed - perhaps better called embezzlement - is to place confiscatory tax rates on excessively high incomes.

It goes without saying, of course, that unearned income such as dividends, interest, and capital gains, should be taxed at least as high, if not higher, than labor income. How we all got bamboozzled by the Reagan era's pro-capital ideology (double-taxation! entrepreneurialism!) is frankly hard to understand. (Piketty engages in a subtle discussion of the point of corporate income taxation while dividends and capital gains are simultaneously taxed.) When all is said and done, the Piketty program would thoroughly undo the "Reagan Revolution" of greed, which led as surely as night follows day to the inequality, the high indebtedness, the corporate short-term-ism, the lower-class misery, the public poverty, and the financial instability we see today. The question is whether our politics have already been so captured by the 1% that Piketty's program is as impossible as the entire commentariat seems to think. Stranger things have happened, in the US, not so long ago.

• Piketty on student debt. Another mechanism of class war.
• Piketty on Piketty.
• There's nothing quite like the death tax.
• Krugman on recent GOP budgets, involving trillion dollar asterisks: "Think about what these budgets would do if you ignore the mysterious trillions in unspecified spending cuts and revenue enhancements. What you’re left with is huge transfers of income from the poor and the working class, who would see severe benefit cuts, to the rich, who would see big tax cuts. And the simplest way to understand these budgets is surely to suppose that they are intended to do what they would, in fact, actually do: make the rich richer and ordinary families poorer."
• GOP, right on cue ... let's eliminate capital gains taxes!
• The media landscape of modern authoritarianism.
• We evidently have too much oil for our own good, let alone coal.
• Burned on both ends.. the real cost of coal.
• Defects in market capitalism, continued ... hospitals.
• We know it's fake, but do theology anyhow.
• Maybe the norms in housing and mortgage lending got out of hand.
• Let your people go!