Podcast appearances and mentions of Emmanuel Saez

Yesterday, the self-styled San Francisco “progressive” Joan Williams was on the show arguing that Democrats need to relearn the language of the American working class. But, as some of you have noted, Williams seems oblivious to the fact that politics is about more than simply aping other people's language. What you say matters, and the language of American working class, like all industrial working classes, is rooted in a critique of capitalism. She should probably read the New Yorker staff writer John Cassidy's excellent new book, Capitalism and its Critics, which traces capitalism's evolution and criticism from the East India Company through modern times. He defines capitalism as production for profit by privately-owned companies in markets, encompassing various forms from Chinese state capitalism to hyper-globalization. The book examines capitalism's most articulate critics including the Luddites, Marx, Engels, Thomas Carlisle, Adam Smith, Rosa Luxemburg, Keynes & Hayek, and contemporary figures like Sylvia Federici and Thomas Piketty. Cassidy explores how major economists were often critics of their era's dominant capitalist model, and untangles capitalism's complicated relationship with colonialism, slavery and AI which he regards as a potentially unprecedented economic disruption. This should be essential listening for all Democrats seeking to reinvent a post Biden-Harris party and message. 5 key takeaways* Capitalism has many forms - From Chinese state capitalism to Keynesian managed capitalism to hyper-globalization, all fitting the basic definition of production for profit by privately-owned companies in markets.* Great economists are typically critics - Smith criticized mercantile capitalism, Keynes critiqued laissez-faire capitalism, and Hayek/Friedman opposed managed capitalism. Each generation's leading economists challenge their era's dominant model.* Modern corporate structure has deep roots - The East India Company was essentially a modern multinational corporation with headquarters, board of directors, stockholders, and even a private army - showing capitalism's organizational continuity across centuries.* Capitalism is intertwined with colonialism and slavery - Industrial capitalism was built on pre-existing colonial and slave systems, particularly through the cotton industry and plantation economies.* AI represents a potentially unprecedented disruption - Unlike previous technological waves, AI may substitute rather than complement human labor on a massive scale, potentially creating political backlash exceeding even the "China shock" that contributed to Trump's rise.Keen On America is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. Full TranscriptAndrew Keen: Hello, everybody. A couple of days ago, we did a show with Joan Williams. She has a new book out, "Outclassed: How the Left Lost the Working Class and How to Win Them Back." A book about language, about how to talk to the American working class. She also had a piece in Jacobin Magazine, an anti-capitalist magazine, about how the left needs to speak to what she calls average American values. We talked, of course, about Bernie Sanders and AOC and their language of fighting oligarchy, and the New York Times followed that up with "The Enduring Power of Anti-Capitalism in American Politics."But of course, that brings the question: what exactly is capitalism? I did a little bit of research. We can find definitions of capitalism from AI, from Wikipedia, even from online dictionaries, but I thought we might do a little better than relying on Wikipedia and come to a man who's given capitalism and its critics a great deal of thought. John Cassidy is well known as a staff writer at The New Yorker. He's the author of a wonderful book, the best book, actually, on the dot-com insanity. And his new book, "Capitalism and its Critics," is out this week. John, congratulations on the book.So I've got to be a bit of a schoolmaster with you, John, and get some definitions first. What exactly is capitalism before we get to criticism of it?John Cassidy: Yeah, I mean, it's a very good question, Andrew. Obviously, through the decades, even the centuries, there have been many different definitions of the term capitalism and there are different types of capitalism. To not be sort of too ideological about it, the working definition I use is basically production for profit—that could be production of goods or mostly in the new and, you know, in today's economy, production of services—for profit by companies which are privately owned in markets. That's a very sort of all-encompassing definition.Within that, you can have all sorts of different types of capitalism. You can have Chinese state capitalism, you can have the old mercantilism, which industrial capitalism came after, which Trump seems to be trying to resurrect. You can have Keynesian managed capitalism that we had for 30 or 40 years after the Second World War, which I grew up in in the UK. Or you can have sort of hyper-globalization, hyper-capitalism that we've tried for the last 30 years. There are all those different varieties of capitalism consistent with a basic definition, I think.Andrew Keen: That keeps you busy, John. I know you started this project, which is a big book and it's a wonderful book. I read it. I don't always read all the books I have on the show, but I read from cover to cover full of remarkable stories of the critics of capitalism. You note in the beginning that you began this in 2016 with the beginnings of Trump. What was it about the 2016 election that triggered a book about capitalism and its critics?John Cassidy: Well, I was reporting on it at the time for The New Yorker and it struck me—I covered, I basically covered the economy in various forms for various publications since the late 80s, early 90s. In fact, one of my first big stories was the stock market crash of '87. So yes, I am that old. But it seemed to me in 2016 when you had Bernie Sanders running from the left and Trump running from the right, but both in some way offering very sort of similar critiques of capitalism. People forget that Trump in 2016 actually was running from the left of the Republican Party. He was attacking big business. He was attacking Wall Street. He doesn't do that these days very much, but at the time he was very much posing as the sort of outsider here to protect the interests of the average working man.And it seemed to me that when you had this sort of pincer movement against the then ruling model, this wasn't just a one-off. It seemed to me it was a sort of an emerging crisis of legitimacy for the system. And I thought there could be a good book written about how we got to here. And originally I thought it would be a relatively short book just based on the last sort of 20 or 30 years since the collapse of the Cold War and the sort of triumphalism of the early 90s.But as I got into it more and more, I realized that so many of the issues which had been raised, things like globalization, rising inequality, monopoly power, exploitation, even pollution and climate change, these issues go back to the very start of the capitalist system or the industrial capitalist system back in sort of late 18th century, early 19th century Britain. So I thought, in the end, I thought, you know what, let's just do the whole thing soup to nuts through the eyes of the critics.There have obviously been many, many histories of capitalism written. I thought that an original way to do it, or hopefully original, would be to do a sort of a narrative through the lives and the critiques of the critics of various stages. So that's, I hope, what sets it apart from other books on the subject, and also provides a sort of narrative frame because, you know, I am a New Yorker writer, I realize if you want people to read things, you've got to make it readable. Easiest way to make things readable is to center them around people. People love reading about other people. So that's sort of the narrative frame. I start off with a whistleblower from the East India Company back in the—Andrew Keen: Yeah, I want to come to that. But before, John, my sense is that to simplify what you're saying, this is a labor of love. You're originally from Leeds, the heart of Yorkshire, the center of the very industrial revolution, the first industrial revolution where, in your historical analysis, capitalism was born. Is it a labor of love? What's your family relationship with capitalism? How long was the family in Leeds?John Cassidy: Right, I mean that's a very good question. It is a labor of love in a way, but it's not—our family doesn't go—I'm from an Irish family, family of Irish immigrants who moved to England in the 1940s and 1950s. So my father actually did start working in a big mill, the Kirkstall Forge in Leeds, which is a big steel mill, and he left after seeing one of his co-workers have his arms chopped off in one of the machinery, so he decided it wasn't for him and he spent his life working in the construction industry, which was dominated by immigrants as it is here now.So I don't have a—it's not like I go back to sort of the start of the industrial revolution, but I did grow up in the middle of Leeds, very working class, very industrial neighborhood. And what a sort of irony is, I'll point out, I used to, when I was a kid, I used to play golf on a municipal golf course called Gotts Park in Leeds, which—you know, most golf courses in America are sort of in the affluent suburbs, country clubs. This was right in the middle of Armley in Leeds, which is where the Victorian jail is and a very rough neighborhood. There's a small bit of land which they built a golf course on. It turns out it was named after one of the very first industrialists, Benjamin Gott, who was a wool and textile industrialist, and who played a part in the Luddite movement, which I mention.So it turns out, I was there when I was 11 or 12, just learning how to play golf on this scrappy golf course. And here I am, 50 years later, writing about Benjamin Gott at the start of the Industrial Revolution. So yeah, no, sure. I think it speaks to me in a way that perhaps it wouldn't to somebody else from a different background.Andrew Keen: We did a show with William Dalrymple, actually, a couple of years ago. He's been on actually since, the Anglo or Scottish Indian historian. His book on the East India Company, "The Anarchy," is a classic. You begin in some ways your history of capitalism with the East India Company. What was it about the East India Company, John, that makes it different from other for-profit organizations in economic, Western economic history?John Cassidy: I mean, I read that. It's a great book, by the way. That was actually quoted in my chapter on these. Yeah, I remember. I mean, the reason I focused on it was for two reasons. Number one, I was looking for a start, a narrative start to the book. And it seemed to me, you know, the obvious place to start is with the start of the industrial revolution. If you look at economics history textbooks, that's where they always start with Arkwright and all the inventors, you know, who were the sort of techno-entrepreneurs of their time, the sort of British Silicon Valley, if you could think of it as, in Lancashire and Derbyshire in the late 18th century.So I knew I had to sort of start there in some way, but I thought that's a bit pat. Is there another way into it? And it turns out that in 1772 in England, there was a huge bailout of the East India Company, very much like the sort of 2008, 2009 bailout of Wall Street. The company got into trouble. So I thought, you know, maybe there's something there. And I eventually found this guy, William Bolts, who worked for the East India Company, turned into a whistleblower after he was fired for finagling in India like lots of the people who worked for the company did.So that gave me two things. Number one, it gave me—you know, I'm a writer, so it gave me something to focus on a narrative. His personal history is very interesting. But number two, it gave me a sort of foundation because industrial capitalism didn't come from nowhere. You know, it was built on top of a pre-existing form of capitalism, which we now call mercantile capitalism, which was very protectionist, which speaks to us now. But also it had these big monopolistic multinational companies.The East India Company, in some ways, was a very modern corporation. It had a headquarters in Leadenhall Street in the city of London. It had a board of directors, it had stockholders, the company sent out very detailed instructions to the people in the field in India and Indonesia and Malaysia who were traders who bought things from the locals there, brought them back to England on their company ships. They had a company army even to enforce—to protect their operations there. It was an incredible multinational corporation.So that was also, I think, fascinating because it showed that even in the pre-existing system, you know, big corporations existed, there were monopolies, they had royal monopolies given—first the East India Company got one from Queen Elizabeth. But in some ways, they were very similar to modern monopolistic corporations. And they had some of the problems we've seen with modern monopolistic corporations, the way they acted. And Bolts was the sort of first corporate whistleblower, I thought. Yeah, that was a way of sort of getting into the story, I think. Hopefully, you know, it's just a good read, I think.William Bolts's story because he was—he came from nowhere, he was Dutch, he wasn't even English and he joined the company as a sort of impoverished young man, went to India like a lot of English minor aristocrats did to sort of make your fortune. The way the company worked, you had to sort of work on company time and make as much money as you could for the company, but then in your spare time you're allowed to trade for yourself. So a lot of the—without getting into too much detail, but you know, English aristocracy was based on—you know, the eldest child inherits everything, so if you were the younger brother of the Duke of Norfolk, you actually didn't inherit anything. So all of these minor aristocrats, so major aristocrats, but who weren't first born, joined the East India Company, went out to India and made a fortune, and then came back and built huge houses. Lots of the great manor houses in southern England were built by people from the East India Company and they were known as Nabobs, which is an Indian term. So they were the sort of, you know, billionaires of their time, and it was based on—as I say, it wasn't based on industrial capitalism, it was based on mercantile capitalism.Andrew Keen: Yeah, the beginning of the book, which focuses on Bolts and the East India Company, brings to mind for me two things. Firstly, the intimacy of modern capitalism, modern industrial capitalism with colonialism and of course slavery—lots of books have been written on that. Touch on this and also the relationship between the birth of capitalism and the birth of liberalism or democracy. John Stuart Mill, of course, the father in many ways of Western democracy. His day job, ironically enough, or perhaps not ironically, was at the East India Company. So how do those two things connect, or is it just coincidental?John Cassidy: Well, I don't think it is entirely coincidental, I mean, J.S. Mill—his father, James Mill, was also a well-known philosopher in the sort of, obviously, in the earlier generation, earlier than him. And he actually wrote the official history of the East India Company. And I think they gave his son, the sort of brilliant protégé, J.S. Mill, a job as largely as a sort of sinecure, I think. But he did go in and work there in the offices three or four days a week.But I think it does show how sort of integral—the sort of—as you say, the inheritor and the servant in Britain, particularly, of colonial capitalism was. So the East India Company was, you know, it was in decline by that stage in the middle of the 19th century, but it didn't actually give up its monopoly. It wasn't forced to give up its monopoly on the Indian trade until 1857, after, you know, some notorious massacres and there was a sort of public outcry.So yeah, no, that's—it's very interesting that the British—it's sort of unique to Britain in a way, but it's interesting that industrial capitalism arose alongside this pre-existing capitalist structure and somebody like Mill is a sort of paradoxical figure because actually he was quite critical of aspects of industrial capitalism and supported sort of taxes on the rich, even though he's known as the great, you know, one of the great apostles of the free market and free market liberalism. And his day job, as you say, he was working for the East India Company.Andrew Keen: What about the relationship between the birth of industrial capitalism, colonialism and slavery? Those are big questions and I know you deal with them in some—John Cassidy: I think you can't just write an economic history of capitalism now just starting with the cotton industry and say, you know, it was all about—it was all about just technical progress and gadgets, etc. It was built on a sort of pre-existing system which was colonial and, you know, the slave trade was a central element of that. Now, as you say, there have been lots and lots of books written about it, the whole 1619 project got an incredible amount of attention a few years ago. So I didn't really want to rehash all that, but I did want to acknowledge the sort of role of slavery, especially in the rise of the cotton industry because of course, a lot of the raw cotton was grown in the plantations in the American South.So the way I actually ended up doing that was by writing a chapter about Eric Williams, a Trinidadian writer who ended up as the Prime Minister of Trinidad when it became independent in the 1960s. But when he was younger, he wrote a book which is now regarded as a classic. He went to Oxford to do a PhD, won a scholarship. He was very smart. I won a sort of Oxford scholarship myself but 50 years before that, he came across the Atlantic and did an undergraduate degree in history and then did a PhD there and his PhD thesis was on slavery and capitalism.And at the time, in the 1930s, the link really wasn't acknowledged. You could read any sort of standard economic history written by British historians, and they completely ignored that. He made the argument that, you know, slavery was integral to the rise of capitalism and he basically started an argument which has been raging ever since the 1930s and, you know, if you want to study economic history now you have to sort of—you know, have to have to address that. And the way I thought, even though the—it's called the Williams thesis is very famous. I don't think many people knew much about where it came from. So I thought I'd do a chapter on—Andrew Keen: Yeah, that chapter is excellent. You mentioned earlier the Luddites, you're from Yorkshire where Luddism in some ways was born. One of the early chapters is on the Luddites. We did a show with Brian Merchant, his book, "Blood in the Machine," has done very well, I'm sure you're familiar with it. I always understood the Luddites as being against industrialization, against the machine, as opposed to being against capitalism. But did those two things get muddled together in the history of the Luddites?John Cassidy: I think they did. I mean, you know, Luddites, when we grew up, I mean you're English too, you know to be called a Luddite was a term of abuse, right? You know, you were sort of antediluvian, anti-technology, you're stupid. It was only, I think, with the sort of computer revolution, the tech revolution of the last 30, 40 years and the sort of disruptions it's caused, that people have started to look back at the Luddites and say, perhaps they had a point.For them, they were basically pre-industrial capitalism artisans. They worked for profit-making concerns, small workshops. Some of them worked for themselves, so they were sort of sole proprietor capitalists. Or they worked in small venues, but the rise of industrial capitalism, factory capitalism or whatever, basically took away their livelihoods progressively. So they associated capitalism with new technology. In their minds it was the same. But their argument wasn't really a technological one or even an economic one, it was more a moral one. They basically made the moral argument that capitalists shouldn't have the right to just take away their livelihoods with no sort of recompense for them.At the time they didn't have any parliamentary representation. You know, they weren't revolutionaries. The first thing they did was create petitions to try and get parliament to step in, sort of introduce some regulation here. They got turned down repeatedly by the sort of—even though it was a very aristocratic parliament, places like Manchester and Leeds didn't have any representation at all. So it was only after that that they sort of turned violent and started, you know, smashing machines and machines, I think, were sort of symbols of the system, which they saw as morally unjust.And I think that's sort of what—obviously, there's, you know, a lot of technological disruption now, so we can, especially as it starts to come for the educated cognitive class, we can sort of sympathize with them more. But I think the sort of moral critique that there's this, you know, underneath the sort of great creativity and economic growth that capitalism produces, there is also a lot of destruction and a lot of victims. And I think that message, you know, is becoming a lot more—that's why I think why they've been rediscovered in the last five or ten years and I'm one of the people I guess contributing to that rediscovery.Andrew Keen: There's obviously many critiques of capitalism politically. I want to come to Marx in a second, but your chapter, I thought, on Thomas Carlyle and this nostalgic conservatism was very important and there are other conservatives as well. John, do you think that—and you mentioned Trump earlier, who is essentially a nostalgist for a—I don't know, some sort of bizarre pre-capitalist age in America. Is there something particularly powerful about the anti-capitalism of romantics like Carlyle, 19th century Englishman, there were many others of course.John Cassidy: Well, I think so. I mean, I think what is—conservatism, when we were young anyway, was associated with Thatcherism and Reaganism, which, you know, lionized the free market and free market capitalism and was a reaction against the pre-existing form of capitalism, Keynesian capitalism of the sort of 40s to the 80s. But I think what got lost in that era was the fact that there have always been—you've got Hayek up there, obviously—Andrew Keen: And then Keynes and Hayek, the two—John Cassidy: Right, it goes to the end of that. They had a great debate in the 1930s about these issues. But Hayek really wasn't a conservative person, and neither was Milton Friedman. They were sort of free market revolutionaries, really, that you'd let the market rip and it does good things. And I think that that sort of a view, you know, it just became very powerful. But we sort of lost sight of the fact that there was also a much older tradition of sort of suspicion of radical changes of any type. And that was what conservatism was about to some extent. If you think about Baldwin in Britain, for example.And there was a sort of—during the Industrial Revolution, some of the strongest supporters of factory acts to reduce hours and hourly wages for women and kids were actually conservatives, Tories, as they were called at the time, like Ashley. That tradition, Carlyle was a sort of extreme representative of that. I mean, Carlyle was a sort of proto-fascist, let's not romanticize him, he lionized strongmen, Frederick the Great, and he didn't really believe in democracy. But he also had—he was appalled by the sort of, you know, the—like, what's the phrase I'm looking for? The sort of destructive aspects of industrial capitalism, both on the workers, you know, he said it was a dehumanizing system, sounded like Marx in some ways. That it dehumanized the workers, but also it destroyed the environment.He was an early environmentalist. He venerated the environment, was actually very strongly linked to the transcendentalists in America, people like Thoreau, who went to visit him when he visited Britain and he saw the sort of destructive impact that capitalism was having locally in places like Manchester, which were filthy with filthy rivers, etc. So he just saw the whole system as sort of morally bankrupt and he was a great writer, Carlyle, whatever you think of him. Great user of language, so he has these great ringing phrases like, you know, the cash nexus or calling it the Gospel of Mammonism, the shabbiest gospel ever preached under the sun was industrial capitalism.So, again, you know, that's a sort of paradoxical thing, because I think for so long conservatism was associated with, you know, with support for the free market and still is in most of the Republican Party, but then along comes Trump and sort of conquers the party with a, you know, more skeptical, as you say, romantic, not really based on any reality, but a sort of romantic view that America can stand by itself in the world. I mean, I see Trump actually as a sort of an effort to sort of throw back to mercantile capitalism in a way. You know, which was not just pre-industrial, but was also pre-democracy, run by monarchs, which I'm sure appeals to him, and it was based on, you know, large—there were large tariffs. You couldn't import things in the UK. If you want to import anything to the UK, you have to send it on a British ship because of the navigation laws. It was a very protectionist system and it's actually, you know, as I said, had a lot of parallels with what Trump's trying to do or tries to do until he backs off.Andrew Keen: You cheat a little bit in the book in the sense that you—everyone has their own chapter. We'll talk a little bit about Hayek and Smith and Lenin and Friedman. You do have one chapter on Marx, but you also have a chapter on Engels. So you kind of cheat. You combine the two. Is it possible, though, to do—and you've just written this book, so you know this as well as anyone. How do you write a book about capitalism and its critics and only really give one chapter to Marx, who is so dominant? I mean, you've got lots of Marxists in the book, including Lenin and Luxemburg. How fundamental is Marx to a criticism of capitalism? Is most criticism, especially from the left, from progressives, is it really just all a footnote to Marx?John Cassidy: I wouldn't go that far, but I think obviously on the left he is the central figure. But there's an element of sort of trying to rebuild Engels a bit in this. I mean, I think of Engels and Marx—I mean obviously Marx wrote the great classic "Capital," etc. But in the 1840s, when they both started writing about capitalism, Engels was sort of ahead of Marx in some ways. I mean, the sort of materialist concept, the idea that economics rules everything, Engels actually was the first one to come up with that in an essay in the 1840s which Marx then published in one of his—in the German newspaper he worked for at the time, radical newspaper, and he acknowledged openly that that was really what got him thinking seriously about economics, and even in the late—in 20, 25 years later when he wrote "Capital," all three volumes of it and the Grundrisse, just these enormous outpourings of analysis on capitalism.He acknowledged Engels's role in that and obviously Engels wrote the first draft of the Communist Manifesto in 1848 too, which Marx then topped and tailed and—he was a better writer obviously, Marx, and he gave it the dramatic language that we all know it for. So I think Engels and Marx together obviously are the central sort of figures in the sort of left-wing critique. But they didn't start out like that. I mean, they were very obscure, you've got to remember.You know, they were—when they were writing, Marx was writing "Capital" in London, it never even got published in English for another 20 years. It was just published in German. He was basically an expat. He had been thrown out of Germany, he had been thrown out of France, so England was last resort and the British didn't consider him a threat so they were happy to let him and the rest of the German sort of left in there. I think it became—it became the sort of epochal figure after his death really, I think, when he was picked up by the left-wing parties, which are especially the SPD in Germany, which was the first sort of socialist mass party and was officially Marxist until the First World War and there were great internal debates.And then of course, because Lenin and the Russians came out of that tradition too, Marxism then became the official doctrine of the Soviet Union when they adopted a version of it. And again there were massive internal arguments about what Marx really meant, and in fact, you know, one interpretation of the last 150 years of left-wing sort of intellectual development is as a sort of argument about what did Marx really mean and what are the important bits of it, what are the less essential bits of it. It's a bit like the "what did Keynes really mean" that you get in liberal circles.So yeah, Marx, obviously, this is basically an intellectual history of critiques of capitalism. In that frame, he is absolutely a central figure. Why didn't I give him more space than a chapter and a chapter and a half with Engels? There have been a million books written about Marx. I mean, it's not that—it's not that he's an unknown figure. You know, there's a best-selling book written in Britain about 20 years ago about him and then I was quoting, in my biographical research, I relied on some more recent, more scholarly biographies. So he's an endlessly fascinating figure but I didn't want him to dominate the book so I gave him basically the same space as everybody else.Andrew Keen: You've got, as I said, you've got a chapter on Adam Smith who's often considered the father of economics. You've got a chapter on Keynes. You've got a chapter on Friedman. And you've got a chapter on Hayek, all the great modern economists. Is it possible, John, to be a distinguished economist one way or the other and not be a critic of capitalism?John Cassidy: Well, I don't—I mean, I think history would suggest that the greatest economists have been critics of capitalism in their own time. People would say to me, what the hell have you got Milton Friedman and Friedrich Hayek in a book about critics of capitalism? They were great exponents, defenders of capitalism. They loved the system. That is perfectly true. But in the 1930s, 40s, 50s, 60s, and 70s, middle of the 20th century, they were actually arch-critics of the ruling form of capitalism at the time, which was what I call managed capitalism. What some people call Keynesianism, what other people call European social democracy, whatever you call it, it was a model of a mixed economy in which the government played a large role both in propping up demand and in providing an extensive social safety net in the UK and providing public healthcare and public education. It was a sort of hybrid model.Most of the economy in terms of the businesses remained in private hands. So most production was capitalistic. It was a capitalist system. They didn't go to the Soviet model of nationalizing everything and Britain did nationalize some businesses, but most places didn't. The US of course didn't but it was a form of managed capitalism. And Hayek and Friedman were both great critics of that and wanted to sort of move back to 19th century laissez-faire model.Keynes was a—was actually a great, I view him anyway, as really a sort of late Victorian liberal and was trying to protect as much of the sort of J.S. Mill view of the world as he could, but he thought capitalism had one fatal flaw: that it tended to fall into recessions and then they can snowball and the whole system can collapse which is what had basically happened in the early 1930s until Keynesian policies were adopted. Keynes sort of differed from a lot of his followers—I have a chapter on Joan Robinson in there, who were pretty left-wing and wanted to sort of use Keynesianism as a way to shift the economy quite far to the left. Keynes didn't really believe in that. He has a famous quote that, you know, once you get to full employment, you can then rely on the free market to sort of take care of things. He was still a liberal at heart.Going back to Adam Smith, why is he in a book on criticism of capitalism? And again, it goes back to what I said at the beginning. He actually wrote "The Wealth of Nations"—he explains in the introduction—as a critique of mercantile capitalism. His argument was that he was a pro-free trader, pro-small business, free enterprise. His argument was if you get the government out of the way, we don't need these government-sponsored monopolies like the East India Company. If you just rely on the market, the sort of market forces and competition will produce a good outcome. So then he was seen as a great—you know, he is then seen as the apostle of free market capitalism. I mean when I started as a young reporter, when I used to report in Washington, all the conservatives used to wear Adam Smith badges. You don't see Donald Trump wearing an Adam Smith badge, but that was the case.He was also—the other aspect of Smith, which I highlight, which is not often remarked on—he's also a critic of big business. He has a famous section where he discusses the sort of tendency of any group of more than three businessmen when they get together to try and raise prices and conspire against consumers. And he was very suspicious of, as I say, large companies, monopolies. I think if Adam Smith existed today, I mean, I think he would be a big supporter of Lina Khan and the sort of antitrust movement, he would say capitalism is great as long as you have competition, but if you don't have competition it becomes, you know, exploitative.Andrew Keen: Yeah, if Smith came back to live today, you have a chapter on Thomas Piketty, maybe he may not be French, but he may be taking that position about how the rich benefit from the structure of investment. Piketty's core—I've never had Piketty on the show, but I've had some of his followers like Emmanuel Saez from Berkeley. Yeah. How powerful is Piketty's critique of capitalism within the context of the classical economic analysis from Hayek and Friedman? Yeah, it's a very good question.John Cassidy: It's a very good question. I mean, he's a very paradoxical figure, Piketty, in that he obviously shot to world fame and stardom with his book on capital in the 21st century, which in some ways he obviously used the capital as a way of linking himself to Marx, even though he said he never read Marx. But he was basically making the same argument that if you leave capitalism unrestrained and don't do anything about monopolies etc. or wealth, you're going to get massive inequality and he—I think his great contribution, Piketty and the school of people, one of them you mentioned, around him was we sort of had a vague idea that inequality was going up and that, you know, wages were stagnating, etc.What he and his colleagues did is they produced these sort of scientific empirical studies showing in very simple to understand terms how the sort of share of income and wealth of the top 10 percent, the top 5 percent, the top 1 percent and the top 0.1 percent basically skyrocketed from the 1970s to about 2010. And it was, you know, he was an MIT PhD. Saez, who you mentioned, is a Berkeley professor. They were schooled in neoclassical economics at Harvard and MIT and places like that. So the right couldn't dismiss them as sort of, you know, lefties or Trots or whatever who're just sort of making this stuff up. They had to acknowledge that this was actually an empirical reality.I think it did change the whole basis of the debate and it was sort of part of this reaction against capitalism in the 2010s. You know it was obviously linked to the sort of Sanders and the Occupy Wall Street movement at the time. It came out of the—you know, the financial crisis as well when Wall Street disgraced itself. I mean, I wrote a previous book on all that, but people have sort of, I think, forgotten the great reaction against that a decade ago, which I think even Trump sort of exploited, as I say, by using anti-banker rhetoric at the time.So, Piketty was a great figure, I think, from, you know, I was thinking, who are the most influential critics of capitalism in the 21st century? And I think you'd have to put him up there on the list. I'm not saying he's the only one or the most eminent one. But I think he is a central figure. Now, of course, you'd think, well, this is a really powerful critic of capitalism, and nobody's going to pick up, and Bernie's going to take off and everything. But here we are a decade later now. It seems to be what the backlash has produced is a swing to the right, not a swing to the left. So that's, again, a sort of paradox.Andrew Keen: One person I didn't expect to come up in the book, John, and I was fascinated with this chapter, is Silvia Federici. I've tried to get her on the show. We've had some books about her writing and her kind of—I don't know, you treat her critique as a feminist one. The role of women. Why did you choose to write a chapter about Federici and that feminist critique of capitalism?John Cassidy: Right, right. Well, I don't think it was just feminist. I'll explain what I think it was. Two reasons. Number one, I wanted to get more women into the book. I mean, it's in some sense, it is a history of economics and economic critiques. And they are overwhelmingly written by men and women were sort of written out of the narrative of capitalism for a very long time. So I tried to include as many sort of women as actual thinkers as I could and I have a couple of early socialist feminist thinkers, Anna Wheeler and Flora Tristan and then I cover some of the—I cover Rosa Luxemburg as the great sort of tribune of the left revolutionary socialist, communist whatever you want to call it. Anti-capitalist I think is probably also important to note about. Yeah, and then I also have Joan Robinson, but I wanted somebody to do something in the modern era, and I thought Federici, in the world of the Wages for Housework movement, is very interesting from two perspectives.Number one, Federici herself is a Marxist, and I think she probably would still consider herself a revolutionary. She's based in New York, as you know now. She lived in New York for 50 years, but she came from—she's originally Italian and came out of the Italian left in the 1960s, which was very radical. Do you know her? Did you talk to her? I didn't talk to her on this. No, she—I basically relied on, there has been a lot of, as you say, there's been a lot of stuff written about her over the years. She's written, you know, she's given various long interviews and she's written a book herself, a version, a history of housework, so I figured it was all there and it was just a matter of pulling it together.But I think the critique, why the critique is interesting, most of the book is a sort of critique of how capitalism works, you know, in the production or you know, in factories or in offices or you know, wherever capitalist operations are working, but her critique is sort of domestic reproduction, as she calls it, the role of unpaid labor in supporting capitalism. I mean it goes back a long way actually. There was this moment, I sort of trace it back to the 1940s and 1950s when there were feminists in America who were demonstrating outside factories and making the point that you know, the factory workers and the operations of the factory, it couldn't—there's one of the famous sort of tire factory in California demonstrations where the women made the argument, look this factory can't continue to operate unless we feed and clothe the workers and provide the next generation of workers. You know, that's domestic reproduction. So their argument was that housework should be paid and Federici took that idea and a couple of her colleagues, she founded the—it's a global movement, but she founded the most famous branch in New York City in the 1970s. In Park Slope near where I live actually.And they were—you call it feminists, they were feminists in a way, but they were rejected by the sort of mainstream feminist movement, the sort of Gloria Steinems of the world, who Federici was very critical of because she said they ignored, they really just wanted to get women ahead in the sort of capitalist economy and they ignored the sort of underlying from her perspective, the underlying sort of illegitimacy and exploitation of that system. So they were never accepted as part of the feminist movement. They're to the left of the Feminist Movement.Andrew Keen: You mentioned Keynes, of course, so central in all this, particularly his analysis of the role of automation in capitalism. We did a show recently with Robert Skidelsky and I'm sure you're familiar—John Cassidy: Yeah, yeah, great, great biography of Keynes.Andrew Keen: Yeah, the great biographer of Keynes, whose latest book is "Mindless: The Human Condition in the Age of AI." You yourself wrote a brilliant book on the last tech mania and dot-com capitalism. I used it in a lot of my writing and books. What's your analysis of AI in this latest mania and the role generally of manias in the history of capitalism and indeed in critiquing capitalism? Is AI just the next chapter of the dot-com boom?John Cassidy: I think it's a very deep question. I think I'd give two answers to it. In one sense it is just the latest mania the way—I mean, the way capitalism works is we have these, I go back to Kondratiev, one of my Russian economists who ended up being killed by Stalin. He was the sort of inventor of the long wave theory of capitalism. We have these short waves where you have sort of booms and busts driven by finance and debt etc. But we also have long waves driven by technology.And obviously, in the last 40, 50 years, the two big ones are the original deployment of the internet and microchip technology in the sort of 80s and 90s culminating in the dot-com boom of the late 90s, which as you say, I wrote about. Thanks very much for your kind comments on the book. If you just sort of compare it from a financial basis I think they are very similar just in terms of the sort of role of hype from Wall Street in hyping up these companies. The sort of FOMO aspect of it among investors that they you know, you can't miss out. So just buy the companies blindly. And the sort of lionization in the press and the media of, you know, of AI as the sort of great wave of the future.So if you take a sort of skeptical market based approach, I would say, yeah, this is just another sort of another mania which will eventually burst and it looked like it had burst for a few weeks when Trump put the tariffs up, now the market seemed to be recovering. But I think there is, there may be something new about it. I am not, I don't pretend to be a technical expert. I try to rely on the evidence of or the testimony of people who know the systems well and also economists who have studied it. It seems to me the closer you get to it the more alarming it is in terms of the potential shock value that there is there.I mean Trump and the sort of reaction to a larger extent can be traced back to the China shock where we had this global shock to American manufacturing and sort of hollowed out a lot of the industrial areas much of it, like industrial Britain was hollowed out in the 80s. If you, you know, even people like Altman and Elon Musk, they seem to think that this is going to be on a much larger scale than that and will basically, you know, get rid of the professions as they exist. Which would be a huge, huge shock. And I think a lot of the economists who studied this, who four or five years ago were relatively optimistic, people like Daron Acemoglu, David Autor—Andrew Keen: Simon Johnson, of course, who just won the Nobel Prize, and he's from England.John Cassidy: Simon, I did an event with Simon earlier this week. You know they've studied this a lot more closely than I have but I do interview them and I think five, six years ago they were sort of optimistic that you know this could just be a new steam engine or could be a microchip which would lead to sort of a lot more growth, rising productivity, rising productivity is usually associated with rising wages so sure there'd be short-term costs but ultimately it would be a good thing. Now, I think if you speak to them, they see since the, you know, obviously, the OpenAI—the original launch and now there's just this huge arms race with no government involvement at all I think they're coming to the conclusion that rather than being developed to sort of complement human labor, all these systems are just being rushed out to substitute for human labor. And it's just going, if current trends persist, it's going to be a China shock on an even bigger scale.You know what is going to, if that, if they're right, that is going to produce some huge political backlash at some point, that's inevitable. So I know—the thing when the dot-com bubble burst, it didn't really have that much long-term impact on the economy. People lost the sort of fake money they thought they'd made. And then the companies, obviously some of the companies like Amazon and you know Google were real genuine profit-making companies and if you bought them early you made a fortune. But AI does seem a sort of bigger, scarier phenomenon to me. I don't know. I mean, you're close to it. What do you think?Andrew Keen: Well, I'm waiting for a book, John, from you. I think you can combine dot-com and capitalism and its critics. We need you probably to cover it—you know more about it than me. Final question, I mean, it's a wonderful book and we haven't even scratched the surface everyone needs to get it. I enjoyed the chapter, for example, on Karl Polanyi and so much more. I mean, it's a big book. But my final question, John, is do you have any regrets about anyone you left out? The one person I would have liked to have been included was Rawls because of his sort of treatment of capitalism and luck as a kind of casino. I'm not sure whether you gave any thought to Rawls, but is there someone in retrospect you should have had a chapter on that you left out?John Cassidy: There are lots of people I left out. I mean, that's the problem. I mean there have been hundreds and hundreds of critics of capitalism. Rawls, of course, incredibly influential and his idea of the sort of, you know, the veil of ignorance that you should judge things not knowing where you are in the income distribution and then—Andrew Keen: And it's luck. I mean the idea of some people get lucky and some people don't.John Cassidy: It is the luck of the draw, obviously, what card you pull. I think that is a very powerful critique, but I just—because I am more of an expert on economics, I tended to leave out philosophers and sociologists. I mean, you know, you could say, where's Max Weber? Where are the anarchists? You know, where's Emma Goldman? Where's John Kenneth Galbraith, the sort of great mid-century critic of American industrial capitalism? There's so many people that you could include. I mean, I could have written 10 volumes. In fact, I refer in the book to, you know, there's always been a problem. G.D.H. Cole, a famous English historian, wrote a history of socialism back in the 1960s and 70s. You know, just getting to 1850 took him six volumes. So, you've got to pick and choose, and I don't claim this is the history of capitalism and its critics. That would be a ridiculous claim to make. I just claim it's a history written by me, and hopefully the people are interested in it, and they're sufficiently diverse that you can address all the big questions.Andrew Keen: Well it's certainly incredibly timely. Capitalism and its critics—more and more of them. Sometimes they don't even describe themselves as critics of capitalism when they're talking about oligarchs or billionaires, they're really criticizing capitalism. A must read from one of America's leading journalists. And would you call yourself a critic of capitalism, John?John Cassidy: Yeah, I guess I am, to some extent, sure. I mean, I'm not a—you know, I'm not on the far left, but I'd say I'm a center-left critic of capitalism. Yes, definitely, that would be fair.Andrew Keen: And does the left need to learn? Does everyone on the left need to read the book and learn the language of anti-capitalism in a more coherent and honest way?John Cassidy: I hope so. I mean, obviously, I'd be talking my own book there, as they say, but I hope that people on the left, but not just people on the left. I really did try to sort of be fair to the sort of right-wing critiques as well. I included the Carlyle chapter particularly, obviously, but in the later chapters, I also sort of refer to this emerging critique on the right, the sort of economic nationalist critique. So hopefully, I think people on the right could read it to understand the critiques from the left, and people on the left could read it to understand some of the critiques on the right as well.Andrew Keen: Well, it's a lovely book. It's enormously erudite and simultaneously readable. Anyone who likes John Cassidy's work from The New Yorker will love it. Congratulations, John, on the new book, and I'd love to get you back on the show as anti-capitalism in America picks up steam and perhaps manifests itself in the 2028 election. Thank you so much.John Cassidy: Thanks very much for inviting me on, it was fun.Keen On America is a reader-supported publication. To receive new posts and support my work, consider becoming a free or paid subscriber. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit keenon.substack.com/subscribe

Jonathan Levin is an academic economist who now runs one of the most influential universities in the world. He tells Steve how he saved Comcast a billion dollars, why he turned down Steve's unusual pitch to come to the University of Chicago, and why being a nice guy makes him a better college president. SOURCE:Jonathan Levin, president of Stanford University.   RESOURCES:"Income Segregation and Intergenerational Mobility Across Colleges in the United States," by Raj Chetty, John N Friedman, Emmanuel Saez, Nicholas Turner, and Danny Yagan (The Quarterly Journal of Economics, 2020)."Jonathan Levin: The Most Recent John Bates Clark Medal Winner," by Steve Levitt (Freakonomics Blog, 2011)."Winning Play in Spectrum Auctions," by Jeremy Bulow, Jonathan Levin, and Paul Milgrom (NBER Working Paper, 2009)."Information and Competition in U.S. Forest Service Timber Auctions," by Susan Athey and Jonathan Levin (Journal of Political Economy, 2001). EXTRAS:Vintage Pokémon card pack Instagram video, by Tyler Thrasher (2025)."Higher Education Is Broken. Can It Be Fixed?" by People I (Mostly) Admire (2023)."How Much Are the Right Friends Worth?" by People I (Mostly) Admire (2022).

Es sind vor allem die Superreichen, die ihre Privatvermögen weiter vermehren können, während der Staat weniger Einnahmen für öffentliche Aufgaben zur Verfügung hat. Das ist nicht überraschend: Steuerpolitik ist per se Klassenpolitik und der Gegensatz zwischen arm und reich wurde in den letzten Jahren durch verschiedene Steuerreformen erheblich verschärft. Eine liberalkonservative bzw. rechtskonservative Regierung wird diese Politik noch weitertreiben. Aber warum machen das die Leute mit? Und wie könnte man Vermögen zurück verteilen zu denen, die es tatsächlich erwirtschaftet haben, also zu den lohnabhängig arbeitenden Menschen und denjenigen, die durch ihre unbezahlte care-Arbeit den Laden am Laufen halten? Darüber sprechen wir mit Julia Jirmann vom Netzwerk Steuergerechtigkeit. Die Expertin für Steuerpolitik bringt nicht nur einschlägige Zahlen und Fakten mit, sondern räumt auch mit ein paar gängigen Mythen auf. Schreibt uns an: armutszeugnis@rosalux.org Shownotes: - Der Paritätische: «Wohnen macht arm. Die Berücksichtigung von Wohnkosten macht ein bislang unsichtbares Ausmaß an Armut sichtbar» - https://www.der-paritaetische.de/fileadmin/user_upload/Schwerpunkte/Wohnen/doc/Kurzexpertise_Wohnarmut_24_12_13.pdf - Stefan Bach (DIW) über die steuerpolitischen Wirkungen des Unionsprogramms: https://x.com/SBachTax/status/1868243676121673761 - Julia Jirmann und Christoph Trautvetter: Milliardenvermögen in Deutschland. Lücken der Reichtumserfassung und-besteuerung – Vorschlag für einen alternativen Reichtumsbericht - https://www.boeckler.de/de/boeckler-impuls-mehr-milliardenvermogen-54722.htm - Oxfam: Keine Angst vor Steuerflucht. 100 Jahre demokratische Gegenmaßnahmen und ihre Bedeutung für die Besteuerung deutscher Milliardenvermögen - https://www.oxfam.de/system/files/documents/oxfam_netzwerk_steuergerechtigkeit_2024_keine_angst_vor_steuerflucht_final.pdf - Aufruf der Allianz «Vermögen besteuern jetztd - https://www.netzwerk-steuergerechtigkeit.de/aufruf-fuer-ngos/ Unsere Mitbringsel: - Sabines Rezension des Buchs «Der Triumph der Ungerechtigkeit. Steuern und Ungleichheit im 21. Jahrhundert» von Emmanuel Saez und Gabriel Zucman: https://www.sabinenuss.de/2020/04/01/triumph-der-ungerechtigkeit/ - Backgroundcheck des ZDF «Was kosten uns die Reichen» (https://www.zdf.de/nachrichten/politik/deutschland/superreiche-steuertricks-kosten-backgroundcheck-100.html) und Reaktion des Netzwerks Steuergerechtigkeit (https://www.netzwerk-steuergerechtigkeit.de/offenerbrief_familienunternehmer/) auf den offenen Brief der Lobbygruppe «Die Familienunternehmer» an das ZDF: https://www.familienunternehmer.eu/presse-news/aktuelle-themen/magazin/steuerparadies-deutschland-so-viel-kosten-uns-die-reichen-noch-journalismus-oder-schon-agitprop-ein-offener-brief-an-die-geschaeftsleitung-des-zdf/backto/3841/action/detail/d.html?cHash=5204fc09f81aac8634fb629757a2e45e - David De Jong: Braunes Erbe. Die dunkle Geschichte der reichsten deutschen Unternehmerdynastien: https://www.kiwi-verlag.de/buch/david-de-jong-braunes-erbe-9783462006704 Alle Podcasts der Rosa-Luxemburg-Stiftung: https://www.rosalux.de/podcasts Du möchtest keine Podcast-Folge mehr verpassen? Abonniere unseren monatlichen Newsletter: https://www.rosalux.de/newsletter-abos

We think of them as intellectual enclaves and the surest route to a better life. But U.S. colleges also operate like firms, trying to differentiate their products to win market share and prestige points. In the first episode of a special series originally published in 2022, we ask what our chaotic system gets right — and wrong. (Part 1 of “Freakonomics Radio Goes Back to School.”) SOURCES:Peter Blair, faculty research Fellow of the National Bureau of Economic Research and professor of education at Harvard University.Catharine Hill, former president of Vassar College; trustee at Yale University; and managing director at Ithaka S+R.Morton Schapiro, professor of economics and former president of Northwestern University.Ruth Simmons, former president of Smith College, Brown University, and Prairie View A&M University.Miguel Urquiola, professor of economics at Columbia University. RESOURCES:"Progressivity of Pricing at U.S. Public Universities," by Emily E. Cook and Sarah Turner (NBER Working Paper, 2022)."Community Colleges and Upward Mobility," by Jack Mountjoy (NBER Working Paper, 2021)."How HBCUs Can Accelerate Black Economic Mobility," (McKinsey & Company, 2021).Markets, Minds, and Money: Why America Leads the World in University Research, by Miguel Urquiola (2021)."Mobility Report Cards: The Role of Colleges in Intergenerational Mobility," by Raj Chetty, John N. Friedman, Emmanuel Saez, Nicholas Turner, and Danny Yagan (NBER Working Paper, 2017). EXTRAS:"'If We're All in It for Ourselves, Who Are We?'" by Freakonomics Radio (2024)."'A Low Moment in Higher Education,'" by Freakonomics Radio (2024)."The $1.5 Trillion Question: How to Fix Student-Loan Debt?" by Freakonomics Radio (2019)."Why Larry Summers Is the Economist Everyone Hates to Love," by Freakonomics Radio (2017).

Capitalism can cause massive economic inequalities. Indeed, a century after Adam Smith wrote the Wealth of Nations, the richest 1% owned a record-breaking 70% of England's wealth. Not surprisingly, this era saw the rise of a very different economic theorist: Karl Marx. [You can see this and many other graphs here.] But does capitalism have to increase inequality? If so, why was the golden age of American capitalism an era of rapidly decreasing inequality? Was this “Great Levelling” a natural product of capitalist development, as theorised by Simon Kuznets? Or was it a historical anomaly resulting from the two world wars and political interventions, as argued by Thomas Piketty? Yet more questions emerge if we take a more global outlook. Was the Great Levelling within rich countries but a veil behind which they plundered the Global South, making capitalism an inherent engine of global inequality? If so, why has global inequality reduced during the recent era of globalised capitalism? There are very few people who can judge these questions with the same nuance and understanding as Branko Milanović. Milanović is a leading scholar of global inequality. But he is also a particularly sensitive commentator on capitalism. Born in communist Yugoslavia, Milanović has a rare ability to look at capitalism from an arms-length, without indoctrinated faith but also with a deep appreciation of the limits of its alternatives.  I hope you enjoy our conversation! VISUAL DATA We discuss a lot of numbers in this episode. You can find a lot of relevant graphs in my Substack post: https://onhumans.substack.com/p/the-evolution-of-inequality-under To follow Milanović's own work, and get a lot of more graphs, see his many books and his blog "Global Inequality" at https://branko2f7.substack.com/ SUPPORT I hope you enjoy the conversation. If you do, consider becoming a supporter of On Humans on ⁠⁠⁠⁠Patreon.com/OnHumans⁠⁠⁠⁠.  MENTIONS Names: Karl Marx, Alexis de Tocqueville, Brad DeLong (see episode 18 & season 1 highlights), Simon Kuznets, Arthur Berns, Thomas Piketty,  Gabriel Zucman, Emmanuel Saez, Jason Hickel, François Quesnay, Adam Smith, David Ricardo, Vilfredo Pareto Names: Gini coefficient, Kuznets-curve, Mondragon (a Spanish cooperative), homoploutia (when the rich both own capital and work for an income)  Books: Visions of Inequality (Milanovic), Capital (Marx), Capital in the 21st Century (Piketty), Global Inequality (Milanovic), Capitalism, Alone (Milanovic)

Economist Michael D. Smith says universities are scrambling to protect a status quo that deserves to die. He tells Steve why the current system is unsustainable, and what's at stake if nothing changes. RESOURCES:The Abundant University: Remaking Higher Education for a Digital World, by Michael D. Smith (2023)."Diversifying Society's Leaders? The Determinants and Causal Effects of Admission to Highly Selective Private Colleges," by Raj Chetty, David J. Deming, and John N. Friedman (NBER Working Paper, 2023)."Are Universities Going the Way of CDs and Cable TV?" by Michael D. Smith (The Atlantic, 2020)."For Sale: SAT-Takers' Names. Colleges Buy Student Data and Boost Exclusivity," by Douglas Belkin (The Wall Street Journal, 2019)."High School GPAs and ACT Scores as Predictors of College Completion: Examining Assumptions About Consistency Across High Schools," by Elaine M. Allensworth and Kallie Clark (Educational Researcher, 2020)."Mobility Report Cards: The Role of Colleges in Intergenerational Mobility," by Raj Chetty, John N. Friedman, Emmanuel Saez, Nicholas Turner, and Danny Yagan (NBER Working Paper, 2017)."How U.S. News College Rankings Promote Economic Inequality on Campus," by Benjamin Wermund (Politico, 2017).Streaming, Sharing, Stealing: Big Data and the Future of Entertainment, by Michael D. Smith (2016)."Higher Education's Work Preparation Paradox," by Brandon Busteed (Gallup, 2014)."Let's Level the Playing Field for SAT Prep," by Sal Khan (Khan Academy, 2014)."Race, Poverty and SAT Scores: Modeling the Influences of Family Income on Black and White High School Students' SAT Performance," by Ezekiel J. Dixon-Roman, Howard Everson, and John J Mcardle (Teachers College Record, 2013).EXTRAS:"The Professor Who Said 'No' to Tenure," by People I (Mostly) Admire (2022)."Freakonomics Radio Goes Back to School," series by Freakonomics Radio (2022)."Is This the Future of High School?" by People I (Mostly) Admire (2022)."America's Math Curriculum Doesn't Add Up," by People I (Mostly) Admire (2021).“Sal Khan: ‘If It Works for 15 Cousins, It Could Work for a Billion People.'” by People I (Mostly) Admire (2021).

En début de semaine, l'Association américaine d'économie (AEA) a annoncé avoir remis à l'économiste français Gabriel Zucman la médaille John Bates Clark pour ses travaux consacrés à l'évasion fiscale et la montée des inégalités. Ce prix est considéré comme l'une des plus prestigieuses récompenses accordées aux chercheurs en Sciences économiques. Gabriel Zucman s'est intéressé à la distribution des richesses dès sa thèse de doctorat, Trois essais sur la répartition mondiale des fortunes, dirigée par le pionnier de la pensée sur les inégalités économiques et sociales, Thomas Piketty. Il fait donc partie de cette nouvelle génération d'économistes français qui a contribué à attirer l'attention sur ces questions avec Emmanuel Saez et Lucas Chancel. « Il a été l'un des premiers à quantifier cette question de l'évasion fiscale et des paradis fiscaux, ce qui est très difficile à quantifier », explique l'économiste Philippe Martin, du Cercle des économistes, l'un de ses jurés de thèse, « c'était la question de savoir à quel point, pour un certain nombre de pays occidentaux, les actifs financiers qui étaient déclarés étaient très sous-évalués et que les pays riches étaient plus riches qu'on ne le pensait, car ils étaient dans des paradis fiscaux »En 2017, le livre de Gabriel Zucman, La richesse cachée des nations, enquête sur les paradis fiscaux, paru chez les éditions du Seuil est un best-seller. Il y explique que 8 % de la richesse mondiale est détenue offshore. Grâce à sa connaissance du sujet, il parvient à imposer sa pensée et fait partie en 2018 du comité exécutif du Rapport sur les inégalités mondiales (Le Seuil) qui a un retentissement important.La même année, le Cercle des économistes et le journal Le Monde lui attribuent le prix du Meilleur jeune économiste de France. « C'était un signal positif de se dire qu'enfin, on allait réaborder les questions fiscales de manière dépassionnée, sérieuse et rationnelle pour pouvoir en parler après de manière politique » selon Aurore Lalucq, députée européenne et membre du mouvement citoyen Place publique. Economiste de formation, elle est à l'initiative d'une pétition pour la taxation des ultrariches en collaboration avec Gabriel Zucman. « Pendant des années, on a fait croire que l'impôt et la taxe, c'est le mal. Et c'est ce qui est intéressant dans les travaux de Gabriel, c'est qu'il va vous parler des questions fiscales de manière factuelle et au-delà des éléments de langage habituels qu'on entend depuis la révolution néo libérale qui sont : trop d'impôts tue l'impôt ou les riches vont partir si on les taxe, etc. »Gabriel Zucman est aujourd'hui maître de conférence à l'Université de Berkeley, en Californie. L'économiste de 36 ans a l'oreille de la gauche américaine puisqu'il a conseillé les équipes de Bernie Sanders, le candidat aux primaires démocrates en 2015. C'est même dans l'un de ses articles, co-signé avec Emmanuel Saez, intitulé « le triomphe de l'injustice », que Bernie Sanders trouve sa formule devenue emblématique outre-Atlantique selon laquelle 99% de tous les revenus générés aux États-Unis vont aux 1% les plus riches.

En début de semaine, l'Association américaine d'économie (AEA) a annoncé avoir remis à l'économiste français Gabriel Zucman la médaille John Bates Clark pour ses travaux consacrés à l'évasion fiscale et la montée des inégalités. Ce prix est considéré comme l'une des plus prestigieuses récompenses accordées aux chercheurs en Sciences économiques. Gabriel Zucman s'est intéressé à la distribution des richesses dès sa thèse de doctorat, Trois essais sur la répartition mondiale des fortunes, dirigée par le pionnier de la pensée sur les inégalités économiques et sociales, Thomas Piketty. Il fait donc partie de cette nouvelle génération d'économistes français qui a contribué à attirer l'attention sur ces questions avec Emmanuel Saez et Lucas Chancel. « Il a été l'un des premiers à quantifier cette question de l'évasion fiscale et des paradis fiscaux, ce qui est très difficile à quantifier », explique l'économiste Philippe Martin, du Cercle des économistes, l'un de ses jurés de thèse, « c'était la question de savoir à quel point, pour un certain nombre de pays occidentaux, les actifs financiers qui étaient déclarés étaient très sous-évalués et que les pays riches étaient plus riches qu'on ne le pensait, car ils étaient dans des paradis fiscaux »En 2017, le livre de Gabriel Zucman, La richesse cachée des nations, enquête sur les paradis fiscaux, paru chez les éditions du Seuil est un best-seller. Il y explique que 8 % de la richesse mondiale est détenue offshore. Grâce à sa connaissance du sujet, il parvient à imposer sa pensée et fait partie en 2018 du comité exécutif du Rapport sur les inégalités mondiales (Le Seuil) qui a un retentissement important.La même année, le Cercle des économistes et le journal Le Monde lui attribuent le prix du Meilleur jeune économiste de France. « C'était un signal positif de se dire qu'enfin, on allait réaborder les questions fiscales de manière dépassionnée, sérieuse et rationnelle pour pouvoir en parler après de manière politique » selon Aurore Lalucq, députée européenne et membre du mouvement citoyen Place publique. Economiste de formation, elle est à l'initiative d'une pétition pour la taxation des ultrariches en collaboration avec Gabriel Zucman. « Pendant des années, on a fait croire que l'impôt et la taxe, c'est le mal. Et c'est ce qui est intéressant dans les travaux de Gabriel, c'est qu'il va vous parler des questions fiscales de manière factuelle et au-delà des éléments de langage habituels qu'on entend depuis la révolution néo libérale qui sont : trop d'impôts tue l'impôt ou les riches vont partir si on les taxe, etc. »Gabriel Zucman est aujourd'hui maître de conférence à l'Université de Berkeley, en Californie. L'économiste de 36 ans a l'oreille de la gauche américaine puisqu'il a conseillé les équipes de Bernie Sanders, le candidat aux primaires démocrates en 2015. C'est même dans l'un de ses articles, co-signé avec Emmanuel Saez, intitulé « le triomphe de l'injustice », que Bernie Sanders trouve sa formule devenue emblématique outre-Atlantique selon laquelle 99% de tous les revenus générés aux États-Unis vont aux 1% les plus riches.

Pour la première fois depuis plus d'un siècle, les milliardaires paient moins d'impôts, en proportion de leurs revenus, que chacun des autres groupes sociaux. Ce livre présente une analyse du triomphe de cette injustice fiscale, de l'exonération progressive des revenus du capital au développement d'une nouvelle industrie de l'évasion fiscale, en passant par l'engrenage de la concurrence fiscale internationale.

Hij is nog maar 36 jaar oud, maar wordt nu al gezien als een van de grootste deskundigen als het gaat om de vele, vele manieren waarop (extreem) rijke mensen proberen zo min mogelijk belasting te betalen. We hadden het voorrecht om hem te mogen interviewen tijdens zijn korte bezoek aan Nederland: Gabriel Zucman. De jonge Franse professor studeerde aan de Paris School of Economics, met ene Thomas Piketty als zijn mentor. Zijn eerste werkdag viel precies op de maandag nadat de bank Lehman Brothers was omgevallen en de financiële crisis begon. En hij is onderdeel van een hele nieuwe generatie van economen die baanbrekend onderzoek doen naar ongelijkheid. Zelfs als je nog nooit van hem hebt gehoord, dan heb je waarschijnlijk wel een van zijn grafieken gezien – bijvoorbeeld over de dramatische groei van de ongelijkheid in de Verenigde Staten in de afgelopen vijftig jaar. Zijn cijfers zijn eindeloos geciteerd door politici als Bernie Sanders – bijvoorbeeld het feit dat de rijkste 1 procent van de Amerikanen in totaal bijna evenveel vermogen bezit als de armste 90 procent van de bevolking. Enfin, in deze podcast gaan we behoorlijk de diepte in met Zucman. Hoe groot is de belastingontwijking en -ontduiking door de rijken? Hoe betrouwbaar zijn al die statistieken eigenlijk? En hoe kunnen we het belastingstelsel verbeteren? Leesvoer bij deze aflevering: • Zucman stond samen met zijn Frans-Amerikaanse collega Emmanuel Saez eerder in The New York Times als meest zichtbare en polariserende econoom van de Amerikaanse verkiezingen van 2020. (https://corr.es/43d52f) • We bespraken kort het paper Inequality and Redistribution in the Netherlands van Wouter Leenders et al. (https://corr.es/769cd5) • Een volledig overzicht van de inkomsten die landen mislopen door winstverschuiving is te vinden op missingprofits.world. (https://corr.es/336f39) • Lees ook een van de eerdere artikelen van Zucman zelf, The Missing Wealth of Nations, over hoe activa van landen in het buitenland niet goed op waarde geschat worden. (https://corr.es/5d521d)

Hij is nog maar 36 jaar oud, maar wordt nu al gezien als een van de grootste deskundigen als het gaat om de vele, vele manieren waarop (extreem) rijke mensen proberen zo min mogelijk belasting te betalen. We hadden het voorrecht om hem te mogen interviewen tijdens zijn korte bezoek aan Nederland: Gabriel Zucman. De jonge Franse professor studeerde aan de Paris School of Economics, met ene Thomas Piketty als zijn mentor. Zijn eerste werkdag viel precies op de maandag nadat de bank Lehman Brothers was omgevallen en de financiële crisis begon. En hij is onderdeel van een hele nieuwe generatie van economen die baanbrekend onderzoek doen naar ongelijkheid. Zelfs als je nog nooit van hem hebt gehoord, dan heb je waarschijnlijk wel een van zijn grafieken gezien – bijvoorbeeld over de dramatische groei van de ongelijkheid in de Verenigde Staten in de afgelopen vijftig jaar. Zijn cijfers zijn eindeloos geciteerd door politici als Bernie Sanders – bijvoorbeeld het feit dat de rijkste 1 procent van de Amerikanen in totaal bijna evenveel vermogen bezit als de armste 90 procent van de bevolking. Enfin, in deze podcast gaan we behoorlijk de diepte in met Zucman. Hoe groot is de belastingontwijking en -ontduiking door de rijken? Hoe betrouwbaar zijn al die statistieken eigenlijk? En hoe kunnen we het belastingstelsel verbeteren? Leesvoer bij deze aflevering: • Zucman stond samen met zijn Frans-Amerikaanse collega Emmanuel Saez eerder in The New York Times als meest zichtbare en polariserende econoom van de Amerikaanse verkiezingen van 2020. (https://corr.es/43d52f) • We bespraken kort het paper Inequality and Redistribution in the Netherlands van Wouter Leenders et al. (https://corr.es/769cd5) • Een volledig overzicht van de inkomsten die landen mislopen door winstverschuiving is te vinden op missingprofits.world. (https://corr.es/336f39) • Lees ook een van de eerdere artikelen van Zucman zelf, The Missing Wealth of Nations, over hoe activa van landen in het buitenland niet goed op waarde geschat worden. (https://corr.es/5d521d)

Welcome to Ideas Untrapped. My guest today is Vincent Geloso who is a professor of economics at George Mason University. He studies economic history, political economy, and the measurement of living standards. In today's episode, we discuss the differences between democracies and dictatorships, and their relative performance in socioeconomic development. The allure of authoritarian governance has grown tremendously due to the economic success of countries like China, Korea, and Singapore - which managed to escape crippling national poverty traps. The contestable nature of democracies and the difficulty many democratic countries have to continue on a path of growth seems to many people as evidence that a benevolent dictatorship is what many countries need. Vincent challenges this notion and explains many seemingly high-performing dictatorships are so because their control of state resources allows them direct investments towards singular objectives - (such as winning Olympic medals or reducing infant mortality) but at the same time, come with a flip side of unseen costs due to their lack of rights and economic freedom. He argues that the benefits of dictatorships are not as great as they may seem and that liberal democracies are better able to decentralize decision-making and handle complex multi-variate problems. He concludes that while democracies may not always be successful in achieving certain objectives, the constraints they place on political power and rulers mean that people are better off in terms of economic freedom, rights, and other measures of welfare.TRANSCRIPTTobi;You made the point that dictatorships usually optimise, not your words, but they optimise for univariate factors as opposed to multiple factors, which you get in democracy. So, a dictatorship can be extremely high performing on some metric because they can use the top-down power to allocate resources for that particular goal. Can you shed a bit more light on that? How does that mechanism work in reality?Vincent;Yeah, I think a great image people are used to is the USSR, and they're thinking about two things the USSR did quite well: putting people in space before the United States and winning medals at Olympics. Now, the regime really wanted to do those two things. [That is], win a considerable number of medals in [the] Olympics and win the space race. Both of them were meant to showcase the regime's tremendous ability. It was a propaganda ploy, but since it was a single objective and they had immense means at their disposal, i. e. the means that coercion allows them, they could reach those targets really well. And it's easy to see the Russians putting Sputnik first in space, the Russians putting Laika first in space. We can see them winning medals. It's easy to see. The part that is harder to see, the unseen, is the fact that Russians were not enjoying rapidly rising living standards, they were not enjoying improvements in medical care that was commensurate with their level of income, they were not enjoying high-quality education. You can pile all the unseens of the ability of the USSR as a dictatorship to allocate so much resources to two issues, [which] meant that it came with a flip side, which is that these resources were not available for people to allocate them in ways that they thought was more valuable. So, the virtue of a liberal democracy, unlike a dictatorship, is that a liberal democracy has multiple sets of preferences to deal with. And in a liberal democracy, it's not just the fact that we vote, but also that people have certain rights that are enshrined and which are not the object of political conversation. I cannot seize your property, and it's not okay for people to vote with me to seize your property. And in these societies, the idea is that under a liberal democracy, you are better able to decentralize decision-making, and people can find ways to deal with the multiple trade-offs much better. Whereas a dictatorship can just decide, I care about this. I am king, I am president, I am first secretary of the party, I decide this and we'll do this regardless of how much you value other things that I value less than you do.Tobi;Two things that I want you to shed more light on. Depending on who you talk to or what they are criticizing, people usually selectively pick their dictatorships. If someone is criticizing, say, for example, capitalism, they always point to the Cuban health care system in contrast to the American health care system. How the American system is so terrible, and how capitalism makes everything worse because of the profit motive. And how we can do better by being more like Cuba.  On the other end of that particular spectrum, if you're talking about economic development, critics of democracy like to point to China. China is not a democracy. And look at all the economic growth they've had in the last 40 years, one of the largest reductions in human poverty we've ever seen in history. I mean, from these two examples, what are the shortcomings of these arguments?Vincent; Let's do Cuba first, then we can do China. So, the Cuban example is really good for the case I'm making. Because the case I'm making is essentially that the good comes with the bad and you can't remove them. So, people will generally say with Cuba, “yes, we know they don't have political rights, they don't have economic freedom, but they do have high-quality health care.” And by this they don't mean actually health care, they mean low infant mortality or high life expectancy at birth. My reply is, it's because they don't have all these other rights and all these other options [that] they can have infant mortality that is so low. That's because the regime involves a gigantic amount of resources to the production of healthcare. Cuba spends more than 10% of its GDP on health care. Only countries that are seven or ten times richer than Cuba spend as much as a proportion of GDP on health care. 1% of their population are doctors. In the United States, it is a third of that, 0.3% of the population are doctors. So, it's a gigantic proportion. But then when you scratch a bit behind, doctors are, for example, members of the army. They are part of the military force. The regime employs them as the first line of supervision. So, the doctors are also meant to report back what the population says on the ground. So, they're basically listening posts for the dictatorship. And in the process, yeah, they provide some health care, but they're providing some health care as a byproduct of providing surveillance.The other part is that they're using health care here to promote the regime abroad. And that has one really important effect. One of those is that doctors have targets they must meet, otherwise they're penalized. And when I mean targets, I mean targets for infant mortality. [If] they don't meet those targets, the result is they get punished. And so what do you think doctors do? They will alter their behaviour to avoid punishment. So in some situations, they will reclassify what we call early neonatal death. So, babies who die immediately after exiting the womb to seven days after birth, they will reclassify many of those as late fetal deaths. And late fetal deaths are in-utero deaths or delivery of a dead baby so that the baby exits the womb dead. Now, if a mortality rate starts with early neonatal death [and] not late fetal ones, so if you can reclassify one into the other, you're going to deflate the number total. And the reason why we can detect this is that the sources of both types of mortality are the same,[they] are very similar, so that when you compare them across countries, you generally find the same ratio of one to the other. Generally, it hovers between four to one and six to one. Cuba has a ratio of twelve to 17 to one, which is a clear sign of data manipulation. And it's not because the regime does it out of, like, direct intent. They're not trying to do it directly. It'd be too easy to detect. But by changing people's incentives, doctors' incentives, in that case, that's what they end up with.There are also other things that doctors are allowed to do in Cuba. One of them is that patients do not have the right to refuse treatment. Neither do they have the right to privacy, which means that doctors can use heavy-handed methods to make sure that they meet their targets. So in Cuba, you have stuff like casa de mata nidad, where mothers who have at-risk pregnancies or at-risk behaviour during pregnancy will be forcibly incarcerated during their pregnancy. There are multiple cases of documented, pressured abortions or literally coerced abortions. So not just pressured, but coerced. Like, the level is that the person wants to keep the infant, the doctor forces an abortion to be made. Sometimes, it is made without the mother's knowledge until it is too late to anything being done. So you end up with basically the infant mortality rate, yes, being low, but yes, being low because of data manipulation and changes in behaviour so that the number doesn't mean the same thing as it does in rich countries. And now the part that's really important in all I'm saying is [that] what people call the benefits for Cuba is relatively small. My point is that, yeah, maybe they could be able to do it. But the problem is that the measures that allow this to happen, to have a low infant mortality rate are also the measures that make Cubans immensely poor. The fact that the regime can deploy such force, use doctors in such a way, employ such extreme measures, it's the reason why Cubans also don't have property rights, don't have strong economic freedom, don't have the liberty to trade with others. Which means that on other dimensions, their lives are worse off. That means that, for example, their incomes are lower than they could be. They have higher maternal mortality. So, mothers die to [a] greater proportion in labour than in other countries or post-labour. There are lower rates of access to clean water than in equally poor countries in Latin America. There are lower levels of geographic mobility within the country, there are lower levels of nutrition because, for example, there are still ration services. So that means that, yes, they have certain amount of calories, but they don't have that much diversity in terms of what they're allowed or are able to eat without resorting to the black market. Pile these on. These are all dimensions of life that Cubans get to not enjoy because the regime has so much power to do that one thing relatively well. Let's assume it's relatively well, but the answer is, well, would you want to make that trade-off? And most people would probably, if given the choice, would not make the choice of having this. So, those who are saying, “look at how great it is,” are being fooled by the nature of what dictatorships are. Dictatorships can solve simple problems really well, but complex multivariate problems, they are not able to do it in any meaningful way.The other part that is going to be of also importance is when you look at Cuba, before we move on to China, the other part about Cuba that's worth pointing out is, I was assuming in my previous answer that the regime was actually doing relatively well. Even without considering all the criticism, it still looks like it has a low infant mortality rate. But when you actually look at the history of Cuba, Cuba was exceptional in terms of low infant mortality. Before the Castros took over, Cuba already had a very low level of infant mortality even for a poor country. And so with a friend of mine, a coauthor, Jamie Bologna Pavlik, we used an econometric method to see if Cuba has an infant mortality rate that is as low as it would have been had it not been for the revolution. So, ergo, we're trying to find what is the effect of the revolution on infant mortality and we're trying to use other Latin American countries to predict Cuba's health performance. And what we find is that in the first year of the regime's, infant mortality actually went up, so it increased relative to other Latin American countries, but it gradually reverted back to what would be the long-run trend. So that Cuba is no more exceptional today in terms of infant mortality than it was in 1959. That is actually a very depressing statement because it's saying that the regime wasn't even able to make the country more exceptional. So even if it's able to achieve that mission quite well, it's not clear how well they've done it. At the very least, they haven't made things worse in the very long run, they only made things worse in the short run. So when you're doing, like, kind of, a ledger of goods and bads of the regime, all the bad trade-offs I mentioned: lower incomes, higher mortality rates for mothers and maternity, lower rates of access to clean water, lower rates of access to diverse food sources, lower rates of geographic mobility - pile these on, keep piling them on, that's the cost. What I'm saying is what they call the benefits, they're not even as big as it's disclaimed. The benefits are relatively small.And now with regards to China…Tobi;Yeah.Vincent;The Chinese case is even worse for people because they have a similar story with GDP. So, in China, a regional bureaucrats have to meet certain targets of economic growth. Now, these same bureaucrats are in charge of producing the data that says whether or not there is economic growth. You can see why there is a who guards the guardian's problem here? The person who guards the guardian is apparently one of the guardians. So you could expect some kind of bad behaviour. And there is an economist, Luis Martinez, out of the University of Chicago. What he did is he say, well, we have one measure that we know is a good reflector of economic growth and it is artificial light intensity at night. Largely because the richer a country is, the more light there will be at night time. And so if you have like 1% growth in income, in real numbers, you should have some form of commensurate increase in light intensity during night time. If the two deviates, it's a sign that the GDP numbers are false, that they're misleading. Because if they deviate, the true number, the always true number will be the light intensity at nighttime. So, when Martinez used the nighttime light to compare GDP in Chinese regions overall and the actual GDP, he found that you can cut the growth rate of China by, maybe, two-fifths, so it is 40% slower than it actually is. So, China is not even as impressive as it is. And the thing is now think about the pandemic, think about how extreme the measures that China deployed to restrain this has been, no liberal democracy would have been able to do that, no free society would have tolerated forcibly walling people into their houses. And there are massive downsides to the communist regime in China. Like, yes, the regime is free to do whatever it wants, but it also means that it can put Uyghur Muslims into concentration camps. It also means that it can wall people into their houses when they do not comply with public health order. It also means that people are under the social credit system where they are being largely surveilled on a daily basis. It also means that the government can allocate massive resources to the act of conquering Taiwan or flexing muscles towards Japan. All things that when you think about it, is that really an improvement in welfare? Obviously, you can say that, oh yeah, they're doing X or Y things really well but here are all the bad things that come with this. And those bad things are on net much worse than the good things.Tobi;Now, you keep emphasizing liberal democracy and I want to get at the nuance here because I've seen several results. Either it is from Chile and other countries that say unequivocally that democracies are better for growth than dictatorships, even in the case of Chile, despite all the reforms of Pinochet regime. But what I want to get at is, what exactly about democracies make them better? Because, for example, we can think of Nigeria and Nigeria as a democracy. We've had uninterrupted election cycles for over two decades now, but there's still very weak rule of law. Successive governments still rely on extracting oil rents, basically. And, the degree to which people enjoy rights vary depending on who is in power or their mood on any particular day. And, of course, Nigeria is a democracy. So is it liberal democracy? Is that the key factor?Vincent;So, think about it this way.Tobi;Yeah.Vincent;Think about it this way. Inside the big box of liberal democracy, there is for sure democracy. But the part that makes the box liberal democracy is not only the smaller babushkadal inside that box which is a democracy one, it is the other constraints that we put on the exercise of political power. The true definition of a liberal democracy, at least in my opinion, is that not only are people allowed to vote, but they are restraints on what we can vote on. So, for example, if it's not legitimate for me to steal from you, it is no more legitimate for me to vote with two other people to steal from you. The act of democracy should warrant some acts that are outside the realm of political decision-making. There are also constraints that exist on rulers, so it's not just that there are some rights that are not subject to conversation. There could be also incentives that prevent rulers from abusing the powers they have. That would mean, for example, checks and balances, where there are different chambers that will compete with each other, different regional powers of government that will compete with each other for jurisdiction, and so they will keep each other in balance. It could also be some form of external constraint, because a liberal democracy can also rely on external constraints upon political actors. It could be the fact that people can leave the country, the fact that taxpayers can migrate to another country, puts pressure on politicians to not abuse them. People can move their capital out of the country, [this] creates a pressure on politicians to not try to steal from them, because people will just remove all the productive capital and the ruler will be left with very little to exploit as a result, regardless of whether or not the ruler is elected or not. So the way to think about this is liberal democracy is, you want to have a system where there are rules, incentives, constraints that make it so that we are not betting on a man or a woman, for that matter, being the correct man and woman for the moment. We care about a set of incentives, constraints, and rules that will make sure that even the worst human being possible will feel compelled or compulsed [sic] to do the right thing. So, that's like the old Milton Friedman thing, it's like “I don't want the right man. I want to have a system that makes sure that even the most horrible person on earth is forced to do the right thing.” That's what a liberal democracy is.Now, it is a broad definition that I've provided. It is not narrow in any way. It is not specific, largely because I don't think it can be what works. It's not everywhere the same. The general family to which this belongs is universal. But the way it can work is not the same everywhere. A homogeneous, small, Sweden probably doesn't need as much level of, say, breakdown of provincial versus federal powers. Whereas, from what I understand, Nigeria is a somewhat multinational country, multiethnic country with multiple groups east and west from what I understand the divide is in Nigeria. There, it might be good to have a division inside the country where things that are most homogeneous, you leave to the federal government, to the highest level of power. Then the things that you can delegate to the local level, [it is] better to do it that way. Countries that are incredibly heterogeneous maybe need even more federalism. What is optimal for one place won't work elsewhere. So I couldn't take Belgian institutions and then just dump them in Nigeria. Same as I couldn't just say, well, let's take Swedish institutions and dump them into Canada. But what makes generally Sweden work better in terms of institutions than Nigeria, for example, is the fact that Sweden does fit in that general box of liberal democracy. There are clear constraints, there are restrictions, there are constitutions that are well respected, there's a strong rule of law, and politicians are compelled to not fall prey to their own baser instincts.Tobi;  A couple of months ago, I had Mark Koyama on the show.Vincent; Great guy. He's a colleague of mine.Tobi;Yeah. So, we were talking about state capacity. We're talking about his book with Noel Johnson. So I did bring up your paper on state capacity, [in] which, basically, one description that stuck with me is that you never really find a poor, but highly capable state in history…Vincent;You mean backwards. A rich society with an incapable state?  Tobi; Yes, a rich society with an incapable state. Thanks for that. So, I've been trying to disentangle this state capacity thing, I know Bryan Caplan basically dismissed it as a sleight of hand. Right. So, like, how does it work and how is it a necessary ingredient for economic development, so to speak?Vincent; I am actually quite respectful of the state capacity literature in one way. So let me do like kind of a quick thing. State capacity says that you want the state to be able to do certain missions. Right, so we're not making judgments as to whether the mission is good. State capacity is about the abilities of the state. The reason why that literature has emerged since the 2000… here's a story of economic thought really briefly: in the 1950s, Samuelson and others show, ‘oh, well, there are market failures' and then a few years later there are the public choice rebuttals, where the public choice economists say, ‘well, you're kind of wrong. There are also government failures.' And the state capacity crowd tries to come in between these two and say, ‘yeah, there are market failures and there are government failures. How do we get a state to solve the market failures but not fall into government failures?' Okay, straightforward, good argument. The part that I'm sceptical of is that the argument of the state capacity crowd is that you will have a lot of rich societies that will have strong states, you will have much fewer societies that have strong states but are very poor (the USSR would be a good example of that), [and] you will have a lot of societies that are poor and have weak state. The thing is that they can't seem to explain why it is under their theory that there are no societies that are relatively weak state but rich. Even though in history we do have many examples of these and they collapse all the time.The argument that I make with my colleague, Alexander Salter, is that societies that have weak states will fall prey to predation because their neighbours with stronger state will try to capture their wealth by conquest. If they are conquered, they grow immensely poor, they are made poor. Basically, it's a terrible event for them. Or they resist, and if they resist ably, the result from resistance is that they have to build a strong state themselves to resist predation by other rulers. And so in the argument me and Alex build, it boils down to: the state is not necessary for development, but it is inevitable as an outcome. So, the task of political science, of political economy, is understanding if we are going to be stuck with one of them, how do we make it that we get the least terrible one? If it's not necessary, but it is inevitable, then how do we get to one that will maybe do some benefit, or at least, we can get the best kind possible? Well, that's where the liberal democratic answer gets into. [It] is [that] we need to find sets of constraints, rules, incentives that force the politicians to make it too costly for them to engage in predatory behaviour, in redistributive behaviour, and that they concentrate on what you could call productive behaviour. That would be like solving externalities. Like dealing with pollution or producing public goods stuff that markets have a harder time to produce. Getting into that category is the task of what liberal democracies are trying to do. That is a much harder proposition. Daron Acemoglu in his somewhat awful book, The Narrow Corridor, calls it a narrow corridor. (I don't like that book that much. I think it's a horrible piece of literature. He should have kept it at Why Nations Fail, we had everything we needed with Buchanan, and it was much better in the other version. He was a much worse version of that.) So, Parenthesis over on Daron Acemoglu, but his point is still relatively okay. There is a narrow corridor on which we evolve. That is a very narrow equilibrium that we want to stay on to, to avoid veering either into more territorial forms of government or into different types of authoritarian[ism], in a certain way. So the corridor for a liberal democracy is very, very, very, very narrow.Tobi; I like that description. The state is not necessary but inevitable. Whereas with the traditional state capacity crowd, the state is often assumed and never justified.Vincent;Actually, that's a bit unfair to them. The state capacity crowd, a lot of them are interested in state capacity as a story of the origins of states. That, I think, is a much-valued contribution. However, the issue of whether or not state capacity is linked to growth, I think this is where there's overstretching. My point is “no, there's very little reason to believe that state capacity is related to growth.” State capacity is more the direct or indirect result of growth in the past. So, either you are getting state capacity because you get conquered and you get imposed it by somebody else, or you get state capacity because you want to protect your wealth from other predators.Tobi; For the record, I'm not talking about your colleagues. There's this industrial policy school in development economics who are also big on state capacity, who think the state has to do this heavy lifting. They sort of assume the state and not justify it. But I won't let you go without asking you this final question. You recently published a paper - talking about the work of Thomas Piketty, the French economist - with Phillip Magness, I should say. What is your critique of his work? Because so far as I can tell, yes, I read the op-ed in the Wall Street Journal, [but] everybody else is sort of pretending that a critique of Piketty does not exist. And the political coalition around their research, along with [Emmanuel] Saez and [Gabriel] Zucman is moving rapidly apace, whether it is in taxation or other forms of agenda. So, what is your critique? I know there have been others in the past Matthew Rognlie, I'm not sure how to pronounce his last name.Vincent;Yeah. Our argument is actually very simple. And to be honest, I don't really care about the political conversation where, [for] the political people who are using Piketty's work, I ignore them. There may be a motivation for doing this work because it tells you the importance of his work, but the person I'm trying to talk to is Piketty himself. And the point we make in the paper is that he [not only] massively overestimates inequality in terms of levels, but he also misses times a lot of changes. In the article that me, Phil, another Phil, and John Moore published together in the Economic Journal, we find that there is a very different timeline of inequality in the United States. The most important part is that unlike Piketty and Saez, who can assign most of, and later Zucman… who can assign most of the changes in inequality to tax policy, we find that actually half the decline in inequality that happens between, say, 1917 and 1960, half of it is because of the Great Depression. And just as good economists, we should not be happy that, okay, the rich are growing poor faster than the poor, but the poor are also growing poor. That is not a decent outcome. So we're minimizing the role of fiscal policy and tax policy in doing inequality, but also the other changes that we find give a very different story of what matters in changing policy rather than being taxes, it has more to do with labour mobility within the United States. With capital mobility within the United States. So poor workers from the south, mostly black Americans, move to richer northern cities where wages are higher. Capital moves from the rich north to the poor south where workers are made more productive. So, the levelling has to do with a very standard force in economics - it's a Solow growth model - capital goes to where the returns are greatest, labour goes where the wages are greatest. Most of the convergence is explained by this, not by tax policy changes. So that's the critique we make of them. And there's a lot of other people who are joining in, Gerald Holtham, David Splinter, a lot of people are actually finding that their numbers don't make much sense and they're actually in violation of a lot of other facts of economic history, even though they're correct in the general idea that inequality fell; fell to 1960 and rose since the 1980. The problem is that all they got right is the shape, but they got wrong the timing, the levels, the extent of the changes. They got most of it wrong. They just got the general shape right. And that's no great feat.Tobi;Thank you so much for joining me.Vincent;It was a pleasure. This is a public episode. If you'd like to discuss this with other subscribers or get access to bonus episodes, visit www.ideasuntrapped.com/subscribe

Qui pollue le plus en France et dans le monde ? Qui doit payer pour la transition ? Je reçois cette semaine Lucas Chancel dans Chaleur Humaine. En analysant la question des inégalités sociales et les émissions de gaz à effet de serre, l'économiste Lucas Chancel défend l'idée qu'il faut s'attaquer de front à ces deux enjeux. Il rappelle que la moitié des Français émet autour de 5 tonnes de CO2 par an, alors que les 10% les plus aisés sont au-delà de 25 tonnes par an. Il plaide pour une meilleure redistribution et une augmentation de l'impôt sur les plus fortunés pour assurer une transition climatique juste et efficace.Lucas Chancel est économiste, spécialiste des inégalités et de l'environnement. Il est notamment co-directeur du Laboratoire sur les inégalités mondiales à l'Ecole d'Economie de Paris (PSE). Il est l'un des auteurs, avec Thomas Piketty, Emmanuel Saez et Gabriel Zucman du Rapport mondial sur les inégalités. Précision utile : après l'enregistrement de ce podcast, il a cosigné une tribune de soutien aux candidats de la NUPES aux élections législatives des 12 et 19 juin.Un épisode produit par Adèle Ponticelli, réalisé par Amandine Robillard qui a également composé la musique originale.Chaleur Humaine est aussi une newsletter. Inscrivez-vous pour recevoir chaque mardi à midi notre sélection d'articles : https://www.lemonde.fr/newsletters/chaleur-humaine/ Pour aller plus loin Un article du Monde qui résume les principaux points du rapport sur les inégalités dans le mondeUne chronique de Thomas Piketty pour Le Monde sur le rapport« Chaleur humaine » est un podcast hebdomadaire de réflexion et de débat sur les manières de faire face au défi climatique. Ecoutez gratuitement chaque mardi un nouvel épisode, sur Lemonde.fr, Apple Podcast, Acast ou Spotify. Retrouvez ici tous les épisodes.Vous pouvez d'ores et déjà réagir aux premières émissions et à la newsletter, en écrivant directement à Nabil Wakim à l'adresse chaleurhumaine@lemonde.fr. Hébergé par Acast. Visitez acast.com/privacy pour plus d'informations.

Na educação, o discurso mudou: se os pais de uma determinada época nos incentivavam (ou obrigavam) a escolher uma área que representasse uma ‘carreira de futuro', hoje ouvimos dizer que ‘o que importa é estudar aquilo que nos faz felizes'.Mas será que, na prática, houve mudanças?Será que a educação continua a ser um elevador social?Em que moldes?A família em que se nasce e os professores que se têm continuam a ser elementos determinantes? A Joana Pais e o Hugo van der Ding vão contar as evidências que se estudam na Economia da Educação. No final do episódio, caber-lhe-á a si julgar se estamos mais evoluídos que na época dos nossos avós ou, se afinal, embora mascarado de maior modernidade, continua tudo na mesma. REFERÊNCIAS E LINKS ÚTEIS: ESTUDAR MAIS COMPENSA. MAS QUANTO?Ensino superior como elevador social:Raj Chetty, John Friedman, Emmanuel Saez, Nicholas Turner, Danny Yagan (2017). Mobility Report Cards: The Role of Colleges in Intergenerational Mobility. NBER WORKING PAPER NO. 23618 Retorno do ensino básico e secundário: Angrist, Joshua D., and Alan B. Krueger (1991). Does Compulsory School Attendance Affect Schooling and Earnings?” The Quarterly Journal of Economics 106, 979–1014. Em Portugal: Campos, M., and Reis, H. (2018). Returns to schooling in the Portuguese economy: a reassessment. Public Sector Economics 42, 215-242. EXTERNALIDADES DA EDUCAÇÃO: Lochner, L., and Moretti, E. (2004). The Effect of Education on Crime: Evidence from Prison Inmates, Arrests, and Self-Reports. American Economic Review, 94 (1), 155-189. Cui, Y., and Martins, P. S. (2021). What Drives Social Returns to Education? A Meta-Analysis. World Development, 148, 105651.  

Aujourd'hui on discute de ce qui a amené Ian à se politiser avant de parler à nouveau du travail de Vincent sur la vision des inégalités sociales de Thomas Piketty et Emmanuel Saez qui a eu de l'écho en France, ainsi qu'aux États-Unis avec un article à paraître dans le WSJ et peut-être même un passage au Congrès ! Partie bonus où on parle de l'histoire qui a fait pas mal jaser sur la nageuse transgenre qui a gagné une compétition. On en profite pour parler de la complexité de l'identité. Abonnez-vous à notre patreon, vous pourrez ainsi poser vos questions lors du prochain Q&A ;) Sinon, si vous n'avez pas d'argent, vous pouvez nous aider en regardant ce podcast sur YouTube, en laissant un commentaire et un pouce bleu ou encore en partageant notre contenu sur vos réseaux sociaux (Facebook, Twitter, Instagram, name it). Un gros merci !! Vous pouvez également vous procurer le livre de Vincent Geloso ici, celui de Ian ici et celui de Frank ici On remercie Claude Fortin des Podcasts de Garage pour ce nouveau Jingle. Allez écouter son groupe, le Backslash Band sur Spotify !! --- Send in a voice message: https://podcasters.spotify.com/pod/show/letrioeconomique/message

On February 3rd, 2022, Social Science Matrix and the Center for Studies in Higher Education hosted an online “Author Meets Critics” panel discussion focused on the book, Bankers in the Ivory Tower: The Troubling Rise of Financiers in US Higher Education, by Charlie Eaton, Assistant Professor of Sociology at the University of California, Merced. Elite colleges have long played a crucial role in maintaining social and class status in America while public universities have offered a major stepping-stone to new economic opportunities. However, as Eaton reveals in his book, finance has played a central role in the widening inequality in recent decades, both in American higher education and in American society at large.  In this recording, Professor Eaton, who earned his PhD from the UC Berkeley Department of Sociology, was joined in conversation by Emmanuel Saez, Professor of Economics and Director of the Center for Equitable Growth at UC Berkeley, and Jonathan Glater, Professor of Law at the UC Berkeley School of Law. The panel was moderated by Jennifer Johnson-Hanks, Executive Dean of the UC Berkeley Division of Letters & Science. A video of this panel is available at https://matrix.berkeley.edu/tag/watch/.

Probablement un des meilleurs épisodes du Trio depuis le début. On parle de l'intellect de Justin Trudeau en ouverture avant de parler des inégalités entre les riches et les pauvres en réaction à un extrait de Gérald Fillion. Vincent parle d'économistes (Thomas Piketty et Emmanuel Saez) qui se sont discrédités aux yeux de la communauté en raison de leur manque d'honnêteté avec les chiffres. Dans la partie bonus Patreon, qui dure presque 40 minutes, on parle notamment d'un colis «suspect» et «odorant» reçu par Ian à son bureau ! --- Send in a voice message: https://podcasters.spotify.com/pod/show/letrioeconomique/message

Welcome to The Nonlinear Library, where we use Text-to-Speech software to convert the best writing from the Rationalist and EA communities into audio. This is: Ask Rethink Priorities Anything (AMA), published by Marcus_A_Davis on the effective altruism forum. Hi, all. We're the staff at Rethink Priorities and we would like you to Ask Us Anything! We'll be answering all questions starting Tuesday, 15 December. About the Org Rethink Priorities is an EA research organization focused on influencing funders and key decision-makers to improve decisions within EA and EA-aligned organizations. You might know of our work on quantifying the amount of farmed vertebrates and invertebrates, interspecies comparisons of moral weight, ballot initiatives as a tool for EAs, the risk of nuclear winter, or running the EA Survey, among other projects. You can see all our work to date here and some of our ongoing projects here. Over the next few years we plan to expand our work in animal welfare, relaunch our work in longtermism, and continue our work in movement building, and much more. About the Team Leadership Marcus A. Davis - Co-Executive Director Marcus is a co-founder and co-Executive Director at Rethink Priorities, where he leads research and strategy. He's also a co-founder of Charity Entrepreneurship and Charity Science Health, where he previously systematically analyzed global poverty interventions, helped manage partnerships, and implemented the technical aspects of the project. Peter Hurford - Co-Executive Director Peter is the other co-founder and co-Executive Director of Rethink Priorities. Prior to running Rethink Priorities, he was a data scientist in industry for five years at DataRobot, Avant, Clearcover, and other companies. He also has a Triple Master Rank on Kaggle (an international data science competition) and have achieved top 1% performance in five different Kaggle competitions. He was a previous long-time board member at Animal Charity Evaluators and he continues to serve on the board at Charity Science. Research David Moss - Principal Research Manager David Moss is the Principal Research Manager at Rethink Priorities. He previously worked for Charity Science and has worked on the EA Survey for several years. David studied Philosophy at Cambridge and is an academic researcher of moral psychology. Kim Cuddington - Distinguished Researcher Kim Cuddington is a Distinguished Researcher at Rethink Priorities and is an Associate Professor at the University of Waterloo. She has a PhD in Zoology, a Masters in Biology, and a Masters in Philosophy. She also has a background in ecology and mathematical modeling. David Reinstein - Distinguished Researcher Senior lecturer in economics at the University of Exeter. His research has covered a number of topics including charitable giving and social influences on giving. He originally received his PhD at the University of California, Berkeley under Emmanuel Saez. Jason Schukraft - Senior Research Manager Jason is a Senior Research Manager at Rethink Priorities. Before joining the RP team, Jason earned his doctorate in philosophy from the University of Texas at Austin. Jason specializes in questions at the intersection of epistemology and applied ethics. David Rhys Bernard - Senior Staff Researcher David is a PhD candidate at the Paris School of Economics and has a Masters in Public Policy and Development. He has a background in causal inference and econometrics and has previously worked at Giving What We Can and the United Nations Development Programme. Saulius Šimčikas - Senior Staff Researcher Saulius is a Senior Staff Researcher at Rethink Priorities. Previously, he was a research intern at Animal Charity Evaluators, organized Effective Altruism events in the UK and Lithuania, and worked as a programmer. Neil Dullaghan - Staff Researcher Neil is a Staff Researcher at Rethink Priorities. He also volunteers for Charity Entrepreneurship and Animal Charity Evaluators. Before joining RP, ...

John Friedman is a Professor of Economics and International and Political Affairs at Brown.  Collaborating with scholars such as Raj Chetty and Emmanuel Saez, Friedman works to provide very granular information on very big issues. He is a founding co-director of Opportunity Insights, where researchers and policy analysts work together to analyze new data and create a platform for local stakeholders to make more informed decisions.An economist by training, Friedman uses the information collected by the IRS to tell researchers and the public whether and why the engines of opportunity we rely on actually deliver results. At the NYU Law Tax Policy and Public Finance Colloquium, Friedman presented work that he and his coauthors conducted about colleges and universities. That research “construct[ed] publicly available statistics on parents’ incomes and students’ earnings outcomes for each college in the US using de-identified data from tax records…. reveal[ing] that the degree of parental income segregation across colleges is very high, similar to that across neighborhoods.”  Their work also shows that some schools (such as the State University of New York at Stony Brook) succeed in helping students who grew up poor gain upward mobility.Today’s student quote is from Ha-Joon Chang's, 23 Things They Don't Tell You about Capitalism.Resources:Professor Friedman’s bio.Dan Shaviro’s blog post about Friedman’s visit to the NYU Law Tax Policy and Public Finance Colloquium.The paper Friedman presented at the Colloquium, "Income Segregation and Intergenerational Mobility Across Colleges in the United States".The EITC article discussed in the episode, "Using Differences in Knowledge Across Neighborhood to Uncover the Impacts of the EITC on Earnings".The Pencil Question article is Darien Shanske, "Revitalizing Local Political Economy through Modernizing the Property Tax", 68 Tax L. Rev. 143 (2014).The student quote is taken from Ha-Joon Chang's 23 Things They Don't Tell You about Capitalism

The Triumph of injustice - How the Rich Dodge Taxes and How to Make Them Pay by Emmanuel Saez and Gabriel Zucman (WW Norton, 2019) 232 pages The enormous social inequalities of today have not arisen accidentally. Neither have our democracies been captured by oligarchs accidentally. They have both come about because politicians bought by these oligarchs have changed the tax system and have enabled offshore tax havens to help the rich grow super rich and capture democracy. We can go back to suppressing these super rich oligarchs by reinstalling the right kind of tax system and by acting against tax havens. And yes, states do have the capacity to do this.

French economist Thomas Piketty has recently published a new book, Capital and Ideology, to follow up on his previous best seller, Capital in the Twenty-first Century. The new book goes beyond socialism, where the state owns the means of production, to recommend the abolition of private property because private property creates inequality. The influence of Piketty's ideas is a threat to our way of life because his student, Gabriel Zucman, and his collaborator, Emmanuel Saez, were economic advisors to the Sanders and Warren campaigns and likely influenced the platform recommendations of presidential candidate Joe Biden's "unity task force" that were prepared with the help of Sanders. In this episode the Edifice of Trust host, Victor Bolles, looks at how peoples' lives will be affected if these economic proposals are made into policy. 

Le président Macron va-t-il rétablir l’impôt sur les grandes fortunes (ISF)? C’est la question « du jour d’après la pandémie » qui est en train de monter dans le débat public. Et pas seulement en France : la création d’un impôt sur les ultra riches est très discutée en ce moment, au nord comme au sud, dans les pays émergents comme dans économies les plus avancées. C’est le FMI qui a allumé la mèche. Dans une récente publication sur les questions budgétaires le fonds recommande la mise en place d’une taxe sur les grandes fortunes, présentée comme un impôt de solidarité pour faire face à l’explosion des dépenses liées à la pandémie. En Inde, une centaine de personnalités ont signé une pétition envoyée au Premier ministre Narendra Modi pour réclamer un impôt de 2% sur les 1% les plus riches. La question est aussi d’actualité en Afrique du Sud et dans de nombreux pays d’Amérique latine. Les plus fortunés paieraient donc la facture du Covid-19 ? C’est le schéma retenu aux États-Unis par l’économiste Daniel Markovit. Il préconise l'introduction d'une taxe ponctuelle de 5% sur les 5% les plus riches. Recettes escomptées : 2 000 milliards de dollars, soit le montant du premier plan de sauvetage proposé par Donald Trump. Au moment où les déficits se creusent et où la dette enfle, augmenter l’impôt parait inévitable. Mais ponctionner ceux qui sont déjà durement affectés par la crise, les ménages ou les entreprises serait contre-productif. C'est pourquoi cet impôt sur les riches, s’il est bien encadré pour parer à l’évasion fiscale, semble économiquement le plus facile à mettre en place. Un trio d’économistes français -Emmanuel Saez, Gabriel Zucman et Camille Landais, suggère aux Européens de créer un impôt sur le patrimoine lui aussi limité dans le temps. En imposant les patrimoines supérieurs à deux millions d'euros ils estiment que l’addition de la pandémie serait remboursée en dix ans. En Amérique latine et en Afrique du Sud où le taux d’imposition rapporté au PIB est beaucoup plus faible que dans les pays développés, les promoteurs de cet impôt y voient aussi un instrument idéal pour corriger les inégalités de revenus. Les gouvernements sont-ils favorables à cette taxe sur les hauts revenus ? En Amérique latine, seul le gouvernement argentin y est vraiment favorable. En revanche en Équateur, au Paraguay, au Brésil ou au Chili, un pays dirigé par un président milliardaire, les propositions avancées par les partis d’opposition ont peu de chance d'aboutir. En Afrique du Sud, la discussion est encore cantonnée aux cercles académiques. En France l’idée chemine dans les médias ; un proche de l’ancien président Sarkozy -Raymond Soubie son conseiller social-, voit mal comment le gouvernement pourra y échapper. Après son élection Emmanuel Macron s'était empressé de vider l’ISF de sa substance, il pourrait être tenté par une marche arrière parient les analystes. Histoire de rompre avec l’image de président des riches qui lui colle à la peau. Selon Gianmarco Monsellato, avocat associé au sein du cabinet d’avocats Deloitte Taj et expert en fiscalité internationale, l’impôt sur les riches est peu efficace en termes de recettes fiscales mais c’est un puissant message politique. Et donc tentant pour les gouvernements confrontés à des lendemains douloureux sur le plan économique. Cet expert de la fiscalité européenne juge toutefois improbable que l’Europe se convertisse. Elle qui est déjà incapable d’harmoniser l’imposition sur les entreprises. À moins suggère-t-il que les États-Unis ne montrent la voie. Une question qui fera sans doute partie du débat de l’élection présidentielle. ►En bref Les constructeurs PSA et Fiat renoncent à verser des dividendes pour 2019 Coronavirus oblige, leurs actionnaires seront privés du milliard d'euro que chacun d'entre eux prévoyait de verser. En revanche dans le cadre de leur fusion, ces actionnaires toucheront le jackpot, Fiat Chrysler versera plus de 5 milliards de de dividendes. Le Japon veut renforcer le soutien aux entreprises Après avoir soutenu les PME avec des prêts et des subventions Tokyo s'intéresse maintenant aux plus grandes entreprises et prépare le lancement d'un fonds pour entrer au capital des plus fragiles. Tokyo redoute le chômage massif que pourrait entrainer la faillite des fleurons de son économie.

The co-hosts discuss the new prototype account for the distribution of “personal income” (https://www.bea.gov/data/special-topics/distribution-of-personal-income)—what share of income is obtained by the top 1%, the bottom 10%, and so on—unveiled earlier this month by the U.S. government agency that reports Gross Domestic Product statistics. Andrew thinks that this new “distributional national account” is likely to soon change the ways in which we discuss and think about income inequality; Brendan finds out why. They also discuss how the government’s conclusions, and its approach to measuring income inequality, differ from those of the “distributional national account” that Thomas Piketty, Emmanuel Saez, and Gabriel Zucman published a few years ago. How will Piketty and associates respond to the government’s new inequality database? And how will it affect redistributionist politics more generally? In the episode’s current-events segment, the co-hosts discuss Donald Trump’s dangerous peddling of a miracle cure for COVID-19 (the coronavirus) and whether the behavior of this “very stable genius” should be normalized as a valid alternative (https://www.cbsnews.com/news/coronavirus-anthony-fauci-social-distancing-us-italy-face-the-nation/) to what “deep state” experts say—a “hope layperson’s standpoint” rather than a “medical, scientific standpoint.” * ~ * ~ * ~ * Radio Free Humanity is a podcast covering news, politics and philosophy from a Marxist-Humanist perspective. It is co-hosted by Brendan Cooney and Andrew Kliman. We intend to release new episodes every two weeks. Radio Free Humanity is sponsored by Marxist-Humanist Initiative (MHI), but the views expressed by the co-hosts and guests of Radio Free Humanity are their own. They do not necessarily reflect the views and positions of MHI. We welcome and encourage listeners’ comments, posted on this episode’s page of the MHI website. Please visit MHI’s website for information on philosophy & organization, Marxist-Humanist archives, and its online publication, “With Sober Senses”:
https://www.marxisthumanistinitiative.org/

Steuern – wohl kaum jemand zahlt sie gern, doch es führt kein legaler Weg daran vorbei. Das gilt zumindest für die „normalen“ Leute, ob sie selbständig oder angestellt sind. Anders aber ist es für Superreiche, die prozentual viel weniger Steuern zahlen müssen als Menschen mit kleinen und mittleren Einkommen. Während die Vermögensungleichheit immer weiter zunimmt, nutzen Milliardäre jedes Steuerschlupfloch und jede #Steueroase, die sie finden können. Das liegt auch an einer unsozialen #Steuerpolitik, die inzwischen jedoch immer häufiger kritisiert wird. Selbst in den USA sind Forderungen nach Steuererhöhungen nun wahlkampftauglich – wie einige Demokraten beweisen –, könnte man doch etwa mit einer #Vermögenssteuer den Sozialstaat sowie den Green New Deal fabelhaft finanzieren. In der neuen Folge von „Wohlstand für Alle“ sprechen Ole Nymoen und Wolfgang M. Schmitt über Steuern und wie man sie besser verteilen könnte. Quellen: Emmanuel Saez/Gabriel Zucman: Der Triumph der Ungerechtigkeit. Suhrkamp Oles Interview mit Gabriel Zucman: https://www.freitag.de/autoren/der-freitag/konzerne-richtig-zu-besteuern-waere-leicht Ein Bericht über Gabriel Zucman und die Warren-Kampagne: https://www.newyorker.com/news/the-political-scene/the-french-economist-who-helped-invent-elizabeth-warrens-wealth-tax Ihr könnt uns unterstützen - herzlichen Dank! Paypal: https://www.paypal.me/oleundwolfgang Wolfgang M. Schmitt, Ole Nymoen Betreff: Wohlstand fuer Alle IBAN: DE67 5745 0120 0130 7996 12 BIC: MALADE51NWD Twitter: Ole: twitter.com/nymoen_ole Wolfgang: twitter.com/SchmittJunior

As presidential candidates, both Bernie Sanders and Elizabeth Warren have put forward wealth tax proposals. In this episode of Strange Sound I share some thoughts on this issue and discuss the current wealth tax that almost everyone pays but no one talks about. Learn More: Check out the fun, fun wealth tax tool posted by economists Emmanuel Saez and Gabriel Zucman at https://taxjusticenow.org --- Send in a voice message: https://anchor.fm/strangesound/message

Meet Gabriel Zucman - the acclaimed activist economist who’s taking the world by storm on his plans to tax the rich, end tax dodging and fight inequality. He’s "changing how you think about wealth, whether you know it or not". His proposals for a wealth tax on billionaires in the US have been taken on board by US Presidential candidates Bernie Sanders and Elizabeth Warren.We talk to Gabriel about his ideas and his new book, ‘The Triumph of Injustice: How the rich dodge taxes and how they can be made to pay’, which he co-authored with Emmanuel Saez.Gabriel shares how – fascinatingly – the anti-tax rhetoric of the American right wing has its roots in slavery and slave ownership. How the US used to have the most progressive tax system in the world, including a 93% top rate of income tax. How industrial levels of tax dodging by corporates and individuals can be stopped. And why he is so hopeful that progressive change can happen and will happen to fight inequality. Do subscribe to the podcast, and do share with your friends and your family! Email us your ideas, suggestions and feedback to equals@oxfam.org

Brendan interviews Andrew about his recent study “Wealth Inequality in the U.S.: Its Level, Trend, and Significance” (https://www.marxisthumanistinitiative.org/economics/wealth-inequality-in-the-u-s-its-level-trend-and-significance.html). They discuss differences between what the wealthy own and what working people own––the massive difference in the amount, but also how the “wealth” of the working class differs in kind from the capital owned by the wealthy. They also discuss why Emmanuel Saez and Gabriel Zucman (associates of Thomas Piketty) claim that inequality of wealth has skyrocketed while other researchers dispute this, and how and why politicians like Bernie Sanders and Elizabeth Warren are making use of the Saez-Zucman data. Finally, they discuss Andrew’s view that no definitive conclusion can be drawn about the trend in wealth inequality, and what we should focus on in light of that. Also in this episode: Brendan and Andrew discuss “Is America Going Fascist?” (https://www.project-syndicate.org/commentary/trump-fascist-parallels-unhelpful-by-daron-acemoglu-2020-01), a recent article published by Daron Acemoglu, the well-known social-democratic economist at MIT. * ~ * ~ * ~ * Radio Free Humanity is a podcast covering news, politics and philosophy from a Marxist-Humanist perspective. It is co-hosted by Brendan Cooney and Andrew Kliman. We intend to release new episodes every two weeks. Radio Free Humanity is sponsored by Marxist-Humanist Initiative (MHI), but the views expressed by the co-hosts and guests of Radio Free Humanity are their own. They do not necessarily reflect the views and positions of MHI. We welcome and encourage listeners’ comments, posted on this episode’s page of the MHI website. Please visit MHI’s website for information on philosophy & organization, Marxist-Humanist archives, and its online publication, “With Sober Senses”:
https://www.marxisthumanistinitiative.org/ Radio Free Humanity is a podcast covering news, politics and philosophy from a Marxist-Humanist perspective. It is co-hosted by Brendan Cooney and Andrew Kliman. We intend to release new episodes every two weeks. Radio Free Humanity is sponsored by MHI, but the views expressed by the co-hosts and guests of Radio Free Humanity are their own. They do not necessarily reflect the views and positions of MHI.

Emmanuel Saez is a Professor of Economics at UC Berkeley and an economic adviser to Senators Elizabeth Warren and Bernie Sanders.

Emmanuel Saez is a Professor of Economics at UC Berkeley and an economic adviser to Senators Elizabeth Warren and Bernie Sanders.

Emmanuel Saez is a Professor of Economics at UC Berkeley and an economic adviser to Senators Elizabeth Warren and Bernie Sanders.

1- Cina. Nessun gran cambiamento nella diffusione del coronavirus. Secondo l’Oms il boom dei contagi è dovuto al cambiamento dei metodi per la diagnosi. ..Lo speciale di Esteri (Fabrizio Pregliasco – Virologo; Francesca Spigarelli – Università di Macerata)..2-Crisi siriana. A idlib i civili le prime vittime del peggioramento dei rapporti tra Mosca e Ankara. ..Nelle ultime altre migliaia di persone sono fuggite verso il confine turco.(Emanuele Valenti)..3-Il trionfo dell’ingiustizia, ricchezza, evasione fiscale e democrazia. Il nuovo saggio degli economisti francesi Emmanuele Saez e Gabriel Zucman racconta le disuguaglianze nell’ America di Donald Trump.(Veronica Tettamanti) ..4- Sogno di fare il medico nella striscia di Gaza. La storia di Mohammed Shatat  che ha finito gli esami ma rischia di non laurearsi perché non può’ pagare le tasse universitarie.(Cora Ranci – 37.2)..5- World Music: “ dio è un batterista” il nuovo album del percussionista indiano Trilok Gurtu.(Marcello Lorrai)

1- Cina. Nessun gran cambiamento nella diffusione del coronavirus. Secondo l’Oms il boom dei contagi è dovuto al cambiamento dei metodi per la diagnosi. ..Lo speciale di Esteri (Fabrizio Pregliasco – Virologo; Francesca Spigarelli – Università di Macerata)..2-Crisi siriana. A idlib i civili le prime vittime del peggioramento dei rapporti tra Mosca e Ankara. ..Nelle ultime altre migliaia di persone sono fuggite verso il confine turco.(Emanuele Valenti)..3-Il trionfo dell’ingiustizia, ricchezza, evasione fiscale e democrazia. Il nuovo saggio degli economisti francesi Emmanuele Saez e Gabriel Zucman racconta le disuguaglianze nell’ America di Donald Trump.(Veronica Tettamanti) ..4- Sogno di fare il medico nella striscia di Gaza. La storia di Mohammed Shatat  che ha finito gli esami ma rischia di non laurearsi perché non può’ pagare le tasse universitarie.(Cora Ranci – 37.2)..5- World Music: “ dio è un batterista” il nuovo album del percussionista indiano Trilok Gurtu.(Marcello Lorrai)

Emmanuel Saez is probably one of the most controversial economists around these days. Recently, he's garnered significant attention for being one of the architects of Elizabeth Warren's wealth tax proposal. On this episode, Luigi and Kate dig into tax policy, the wealth tax and why Saez's work is so controversial.

Wojciech Kopczuk is a Columbia economics professor who co-authored (in 2004) one of the leading estimates of wealth concentration in the literature, along with current progressive darling Emmanuel Saez. But ever since Thomas Piketty's bestselling book on wealth inequality, Saez has published research with Gabriel Zucman, showing dramatically different results. Kopczuk explains why economists can disagree on the basic facts of wealth concentration, and why there is controversy about Saez and Zucman's latest claim that billionaires pay a lower income tax rate than the working class. Mentioned in the Episode and Other Links of Interest: The YouTube video version (https://youtu.be/zpcQKpUzDT8) of this interview (highly recommended because of supporting graphs). Wojciech Kopczuk's homepage (http://www.columbia.edu/~wk2110/) at Columbia University. Kopczuk and Saez's 2004 article on wealth inequality (https://ntanet.org/NTJ/57/2/ntj-v57n02p445-87-top-wealth-shares-united.pdf?v=%CE%B1&r=9674166805272331) using estate tax data. Saez and Zucman's 2019 New York Times (https://www.nytimes.com/2019/10/11/opinion/sunday/wealth-income-tax-rate.html) article. Kopczuk's NBER paper contrasting the different measures (http://www.columbia.edu/~wk2110/bin/w20734.pdf) of wealth inequality. Help support (http://bobmurphyshow.com/contribute)  the Bob Murphy Show. The audio production for this episode was provided by  Podsworth Media (http://podsworth.com/) .

Who benefits most from the tax system? What did the Trump tax cuts achieve? How do taxes affect inequality? What’s the relationship between taxes and democracy? Tax policy seems like it was designed by, of, and for the rich. But, as our guest today Gabriel Zucman points out, the U.S. tax code was once a vastly different beast. Zucman is an associate professor of economics at UC Berkeley, director of the Center on Wealth and Income Inequality, and economic advisor for two 2020 presidential campaigns. His latest book The Triumph of Injustice: How the Rich Dodge Taxes and How to Make them Pay, co-written with UC Berkeley economist Emmanuel Saez, documents the dramatic transformation of the U.S. tax code. In less than a lifetime, Americans exchanged the most progressive tax system in the world—a tax system with marginal income tax rates as high as 94 percent for the highest earners—for one where the 400 wealthiest members of society pay a lower tax rate than any other income group. Zucman’s work is clear. "Tax dodging” and the current iteration of the tax system—from income and payroll taxes to sales and property taxes—are not inevitable outcomes, but deliberate choices made by policymakers to privilege the interests of wealthy Americans and multinational corporations. If you believe this theory, it follows that we can and should make better choices in the future. For a preview of what these choices might look like and an outline of how we can design a progressive tax system for the twenty-first century, tune in to this conversation between Khalid Kaldi (MPP ’21) and Gabriel Zucman. If tax policy brings you joy, check out: Tax Policy Simulator 60 Profitable Fortune 500 Companies Avoided All Federal Income Taxes in 2018, Institute on Taxation and Economic Policy (Report) Combating Inequality Conference (Video)

Does the solution to widening economic inequality lie in a wealth tax? We speak to Emmanuel Saez, an adviser to Elizabeth Warren who helped design the “Ultra-Millionaire Tax” plan.

Tax rates on the wealthy have steadily eroded in the United States over the last forty years, leaving us with an upside-down tax code that benefits the rich. And it’s surprisingly easy for powerful people to evade the taxes that they do owe, which inevitably inspires another round of harsh budget cuts from conservative lawmakers. Gabriel Zucman, the authority on wealth taxes, joins us this week to explain how the rich dodge taxes, and how we can fix the tax system.  Gabriel Zucman is an Assistant Professor of Economics at the University of California, Berkeley. His research focuses on the accumulation, distribution, and preservation of wealth, with a global and historical perspective. He is the author of ‘The Hidden Wealth of Nations: The Scourge of Tax Havens’, and the co-author, with Emmanuel Saez, of the new book ‘The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay’.   Twitter: @gabriel_zucman Further reading: The Triumph of Injustice: https://wwnorton.com/books/the-triumph-of-injustice The Wealth Detective Who Finds the Hidden Money of the Super Rich: https://www.bloomberg.com/news/features/2019-05-23/the-wealth-detective-who-finds-the-hidden-money-of-the-super-rich Learn more about your ad choices. Visit megaphone.fm/adchoices

TranscriptLisa Kiefer: [00:00:03] This is method to the madness, a biweekly public affairs show on K-A-L-X Berkeley celebrating Bay Area innovators. I'm your host Lisa Kiefer. And today I'm speaking with Gabriel Zucman Professor of Economics and Public Policy here at UC Berkeley. He has just co-authored a book with Emmanuel Saez called The Triumph of Injustice --How the Rich Dodge Taxes and How to Make Them Pay. Welcome to the program, Gabriel.Gabriel Zucman: [00:00:36] Thanks for having me.Lisa Kiefer: [00:00:37] Why did you write this book. What was the problem or problems you were trying to solve?Gabriel Zucman: [00:00:42] So the main problem is the rise of inequality in the US. So if you look for instance at what has happened to income concentration, in 1980, the top 1 percent highest earners in the U.S. earned about 10 percent of total U.S. national income today they earn 20 percent of U.S. national income. Now contrast that with what has happened for the working class for the bottom 50 percent of earners. They used to earn 20 percent of income and now about 12 percent. So essentially the top 1 percent and the bottom 50 percent have have switched their income share. And the reality of the U.S. today is that the 1 percent earns twice as much income in total than the bottom 50 percent a group that by definition is 50 times larger. So you have this huge level of inequality and this big increase in inequality and the tax system is a key institution to regulate inequality. And so we wanted to know OK does it do a good job? Does the tax system limit inequality or does it exacerbate the rise of inequality?Lisa Kiefer: [00:01:58] And as you say in your book all the way back to James Madison the whole point of taxes yes is to raise revenue but the other significant point was to reduce inequality.Gabriel Zucman: [00:02:07] Exactly.Lisa Kiefer: [00:02:08] And that's something that's been kind of forgotten since 1980.Gabriel Zucman: [00:02:11] That's been forgotten despite the fact that it's deeply rooted in American society. The U.S. was created in large part in reaction against the highly unequal aristocratic societies of of Europe in the 18th century and ever since, many people in the US have been concerned about becoming as unequal as Europe. Europe for a long time was perceived as as an anti model, too unequal, at least until the middle of the 20th century. Now it's the opposite, it's funny to see how these beliefs and perceptions have changed over time. Now many people in the US feel that Europe is too equal, but in fact for most of US history it was it was the opposite. The US invented some of the key progressive fiscal institutions designed to limit inequality to regulate inequality. Let me just give one example. In 1943 Franklin Roosevelt goes to Congress. He makes a famous speech. He says I think that no American should have an income after paying taxes of more than twenty five thousand dollars which is the equivalent of a few million dollars today. Therefore I propose to create a top marginal income tax rate of 100 percent above twenty five thousand dollars. And that's the idea of a legal maximum income. That's an American, a Roosevelt invention. And people in Congress they hesitate a little bit you know 100 percent, maybe it's too much, but they agree on 93 percent which when you think about it is that very far from 100 percent. And then the U.S. kept these very high modern 90 percent top marginal income tax rates for a long time. So there is this deeply rooted tradition in the U.S. of using the tax system to limit the concentration of income. The idea being that wealth is a good thing for the working class, for the middle class. It provides safety, provides security. But for the very rich,wealth is not safety or security. Wealth is power. And an extreme concentration of wealth means an extreme concentration of power, of political power, of economic power, which is detrimental to the rest of society and so one key function of the tax system is to prevent such a concentration of wealth and such a concentration of power from happening.Lisa Kiefer: [00:04:52] You've been consulting with Elizabeth Warren and others adopting pieces of some of the ideas that you had. How does Elizabeth Warren's plan, when you plug it into your model in the book, your 1980 model,what was the outcome of plugging in her wealth tax.Gabriel Zucman: [00:05:09] So Elizabeth Warren proposes to create a wealth tax at a rate of 2 percent above 50 million dollars and 6 percent above 1 billion dollars. So just let me explain what this would do. It means that if you have 50 million dollars in wealth or less, you pay zero. One of the things we do in the book we tried to imagine how the U.S. economy would have looked like if such a tax had been in place since 1982. So let me first start with what has happened to wealth concentration since 1982. If you look at the 400 richest Americans, you know Forbes magazine has estimates every year of their wealth. And according to Forbes magazine, the 400 richest Americans owned about 1 percent of U.S. wealth in 1982. And today they own about three point five percent of U.S. wealth. That is their wealth has been growing much much much faster than the economy as a whole and than average wealth in the economy. If the Warren wealth tax had been in place since 1982, inequality, wealth concentration would have increased much less, it would have increased a little bit. That is, today, the top 400 richest Americans would own about one point five percent of U.S. wealth. So a bit more than 82 but that would be much less than the current three point five percent. So this shows something which is very, to me, is very striking, a 6 percent tax on wealth. It's a big deal. You know it means that someone who has a hundred billion dollars has to pay six billion dollars a year in taxes. So it's big. And even if that tax had been in place since 1982, billionaires would still have seen their share of wealth increase.Lisa Kiefer: [00:07:00] In other words they'd still be billionaires.Gabriel Zucman: [00:07:02] Not only billionaires but multi billionaires. Some of them would still have tens of billions of dollars because the rise of wealth inequality has been so massive. The growth rate of wealth of billionaires has been so much higher than the growth rate of wealth for the rest of the population that even with a big wealth tax you know it would not have been enough to reduce inequality.Lisa Kiefer: [00:07:26] Well you give a good example about Warren Buffett. You know he's always bragging about how "I pay taxes. I pay a lot of taxes."Gabriel Zucman: [00:07:32] Yeah. So Warren Buffett is a good illustration for why we need a wealth tax. He's one of the main shareholders of Berkshire Hathaway. His wealth, according to Forbes magazine again, is about 80 billion dollars. His true economic income is his share of Berkshire Hathaway's profits. It's something like five billion dollars a year. That's his income. But what he does is that he instructs this company that he owns, Berkshire Hathaway, not to pay dividends. And so his only taxable income is when he sells a few shares every year of his company, is a taxable income of the order of 10 to 20 million dollars. And on that 10 or 20 million dollars he pays three or six million in capital gains taxes. And now you do the math. His true economic income is 5 billion. His tax bill is something like 5 million. So his effective tax rate is essentially zero percent.Lisa Kiefer: [00:08:41] It's lower than his secretary.Gabriel Zucman: [00:08:43] It's not only lower than its secretary, it's it's zero. Essentially you know five million compared to five billion. It's nothing. Then you have a number of proposals such as oh but let's just increase the top marginal income tax rate or let's just increase the tax rate on capital gains.But you see the problem....Lisa Kiefer: [00:09:01] That's what Bill Gates says.Gabriel Zucman: [00:09:03] That's what Bill Gates, Warren Buffett himself, there is this so-called Buffett Rule that was popular at some point among Democrats and the idea was we need to increase the tax rate on capital gains. Fine. You know it's not a bad idea. But you have to realize that the Buffett rule itself would make essentially no difference to Warren Buffett's tax bill, because even if you increase the capital gains tax rate to 100 percent let's say, then Warren Buffett would have to pay let's say 20 million in taxes. 20 million divided by five billion, which again is his true income, would still be zero percent. So if you want to tax billionaires like Warren Buffett or like Jeff Bezos or like Mark Zuckerberg, the proper way to do that is with a tax on the stock of wealth itself, with a wealth tax. Because when you're extremely rich it's very easy to own billions or tens of billions while having very little taxable income. And so you cannot tax billionaires well just with the income tax. You also need a wealth tax.Lisa Kiefer: [00:10:10] Gates also argues estate taxes and I like your argument in the book, you say well you know fine but are we going to wait around all these years? Some of these billionaires are very young.Gabriel Zucman: [00:10:21] Yeah exactly. You look at Mark Zuckerberg you know he's in his 30s. He's not paying much taxes today. Just like the Warren Buffett example because Facebook doesn't pay dividends. Facebook doesn't pay a lot of corporate tax. So is it wise to wait for 50 years or more before some of the country's wealthiest individuals stopped paying taxes. I don't think that's very wise. You Know, essentially because there are all these needs for revenue for early education, for university, for health care, for infrastructure. These are immediate needs and some billionaires can contribute much much more than they do today. There's no good reason to wait for 50 years to make them contribute.Lisa Kiefer: [00:11:12] If you're just tuning in, you're listening to method to the madness, a bi weekly public affairs show on K A L X Berkeley celebrating Bay Area innovators. I'm speaking with Professor Gabriel Zucman about his new book The Triumph of injustice how the rich dodge taxes and how to make them pay, co-authored by another economics professor here Emmanuel Saez. They advocate for a progressive wealth tax as a solution to global inequality, one that rethinks both evasion and the goals of taxation.Lisa Kiefer: [00:11:48] You talk about labor versus capital and I want you to explain that a little bit because you said for the first time in history labor pays more than capital. Why do the working class pay so many taxes right now. And that has to do with that labor capital crossover.Gabriel Zucman: [00:12:04] Absolutely. So historically the U.S. has taxed capital a lot. The corporate tax was high. The estate tax. Taxes and dividends, on interest. Property taxes. So there is a long tradition of relatively heavy capital taxation in the US. The main change that has happened since the 1980s is that these capital taxes have been rolled back, have have been cut massively, so the corporate income tax is a prime example. In December 2017, the Trump tax reform slashed the corporate income tax rate from 35 percent to 21 percent. Another good example is the estate tax which used to generate quite a lot of revenue in the 1970s. Today almost nobody pays the estate tax and even the very wealthy who are supposed to pay it can claim valuation discount and avoid it in many ways so that the revenue generated by the estate tax is extremely small. Dividends are taxed less than wages and so on and so on so capital taxation is essentially disappearing,it has not disappeared completely but has it has been dramatically reduced. And at the same time Labor taxation has increased. So Labor taxation, what is it? Taxes on wages, you know the income tax, but also the payroll taxes. So no matter how low your wage is in the United States today, 15 percent of that wage is paid in payroll taxes, that fund Social Security and Medicare, and these payroll taxes they used to be quite small you know in the 50s-60s, less than 5 percent of income. And they've grown a lot and these are taxes that are essentially only on wage income. And so you have this process where wages have stagnated for the working class for the middle class. In fact at the bottom of the wage distribution, wages have declined a lot because the federal minimum wage has declined enormously since the 1970s. Today it's only seven point twenty five dollars. It's a number of states and and municipalities like Berkeley have higher minimum wages. But if you look at Southern states for instance they only have the federal minimum wage seven point twenty five dollars an hour, much lower than in the 70s, and at the same time as minimum wage workers so their income fall, their taxes have increased because of the big increase in payroll taxes. And I don't think that's a sustainable process.Lisa Kiefer: [00:14:40] And not only that, the cost of childcare, education, I mean when you think about it, they could be considered taxes on the working people. You know you're out of pocket for everything and not to mention medical care and a lot of people do not even have medical care.Gabriel Zucman: [00:14:55] Absolutely. And that's a very important point. When you look for instance at health care, health insurance, it is in effect a giant tax today on working families. If you are lucky enough to work for a firm or an employer that has more than 50 workers, the firm has to provide you with health insurance, that's mandatory. And the way this works is that employers pay premiums to insurance companies and these premiums are enormous, the costs for covered work today on average is thirteen thousand dollars. That thirteen thousand dollars that in effect reduces the wage of employees. Okay. That's something that could be added to their wage for instance if there was a public insurance program, if everybody was covered by Medicare, workers could get thirteen thousand dollars more in wages and it would make no difference for employers. These insurance premiums are in effect a huge tax on labor, a huge hidden tax. There mandatory.Lisa Kiefer: [00:16:04] You call it a poll tax.Gabriel Zucman: [00:16:05] We call them a poll tax or head tax because they are of a fixed amount per head, that is, the employer pays those same essentially for a secretary and for an executive-- thirteen thousand dollars. So it's the most regressive type of tax. It doesn't depend on income, it doesn't depend on your ability to pay. It reduces wages by thirteen thousand dollars for all work workers no matter what their wage is. This is a huge problem. This is a big part of the reason why wages have stagnated since the 1980s for the working class and the middle class. Their wages have stagnated because employers have to pay more and more to private health insurance companies and so that leaves less and less money that can be paid in wages.Lisa Kiefer: [00:16:56] In the Democratic debates, why are they not explaining this. They seem to defend the choice of a private insurance tax. "Oh let people choose." It doesn't sound like people truly understand what they are choosing.Gabriel Zucman: [00:17:11] I agree. We are trying to explain that in the book and we are trying to explain that to as many people as we can. There are many problems with the way that healthcare and health insurance currently works in the US, but the main problem is how it reduces wages dramatically for the working class and for the middle class. And we have a solution. In my opinion, this is how things should be presented. If you move to a universal public health insurance program let's call it Medicare for all. What would happen the first Year? Employers would be required to convert insurance premiums into wages. That is, an employer that used to pay thirteen thousand dollars for the health care of each employees, would add thirteen thousand dollars to their wages, so this would be the biggest pay raise in a generation. First year of Medicare for all, everybody's wage increases by thirteen thousand dollars. And then of course you need to collect extra taxes to fund Medicare for all. But if these taxes are smart enough, if they are not head taxes or poll taxes that doesn't vary with income but rather if they are taxes based on your income or your wealth or if you tax corporate profits, you can make sure that the new tax would be much lower for the vast majority of workers than the extra wage that they gained. And so you can make sure that 90 percent of workers would benefit from a transition to Medicare for All in the sense that they would have a huge wage boost. They would have to pay a bit more in taxes but the extra tax would be much less than thirteen thousand dollars. Any my way is the proper way to explain Medicare for all. Your wages have stagnated. Big part of the explanation is there so much money that goes to private health insurance. There's going to be a law that says all the premiums are converted back into wages. Part of your wage was stolen. Now we're giving it back to you. You have a huge wage boost. We're going to raise taxes. But in a progressive manner so that the bottom 90 percent of the income distribution has a big net of tax pay increase.Lisa Kiefer: [00:19:33] With a wealth tax, it seems like the taxes for middle class and lower class would actually go down, even paying for Medicare for all.Gabriel Zucman: [00:19:41] Yes that is, if you include current health insurance premiums in your measure of the tax rate which I think is legitimate since these premiums are essentially like private taxes, mandatory payments. And if you abolish these premiums and replace those by progressive taxes, you get a big tax cut for essentially 90 percent of the population.Lisa Kiefer: [00:20:05] That's something no one's talking about.Gabriel Zucman: [00:20:07] Not yet. I'm not losing hope.Lisa Kiefer: [00:20:09] One of your most interesting chapters is on tax evasion and tax competition, which is going to be a challenge to any kind of change to our tax system. Can you talk about what you discovered and actually it goes back to when you were working as a young man at Exane.Gabriel Zucman: [00:20:26] Yes. So many people have that view that in a globalized world it's impossible to tax multinational companies, impossible to tax corporations, because if you do that they would move their profits to tax havens, the Cayman Islands or Bermuda. Or they will move their factories or their headquarters, their production activities, to low tax places like Ireland. And so according to that view, the only possible future is the race to the bottom with respect to the corporate income tax rate. So countries slashing their rates one after another. And we are very much in that situation today where countries are slashing their corporate tax rate. And for a long time I thought OK no this this makes sense. I understand why in a globalized world, countries want to attract some activity by offering lower rate and there's going to be tax competition and it's the huge pressure that pushes towards lower rates. But what we understood by doing research, that the research is summarised in the book is that this view is actually wrong. That is tax competition, just like tax avoidance or tax evasion, these are not laws of nature. These are policy choices. So we've embraced as nations, collectively we've embraced a certain form of globalization, which is characterized by tax competition and tax avoidance. But that's a choice. It's not a very democratic or very transparent choice, not a very well-informed choice, but it's a choice that's been made, and we can make other choices. There's another form of globalization that's possible. There's no tax competition. There's no profit shifting. There's there's much less tax evasion. So the way this would work for instance is this: right now if you are a U.S. multinational company and you book your profits in Bermuda, for instance, where the corporate tax rate is 0 percent, you don't have to pay taxes. Bermuda chooses not to collect taxes and the U.S. essentially doesn't tax the profits booked by its companies abroad. Okay that's that's a choice but we can make another choice. We could say the U.S. is going to tax all the foreign profits of its companies. It's going to collect the taxes that other countries choose not to collect. If Apple for instance, books a billion dollars in profits in Bermuda, taxed at 0 percent, and then the corporate tax rate is 30 percent in the U.S., the U.S. is going to tax that billion dollar at a rate of 30 percent in the U.S.. If Apple Books profits in Ireland taxed at 2 percent in Ireland the U.S. is going to collect 28 percent, so that the total rate would be 30 percent on a country by country basis.Lisa Kiefer: [00:23:12] So that would change everything.Gabriel Zucman: [00:23:14] That changes everything because then it removes any incentive for firms to book profits in tax havens, or to move real activity to low tax places, one. And second, since firms wouldn't have incentives anymore to do these things, it removes any incentive for tax havens to offer low tax rates in the first place. Now they would have incentives to actually increase that tax rate as so you see how you change the race to the bottom into a race to the top.Lisa Kiefer: [00:23:48] Yes and manufacturing might start to happen more in the countries that had previously been taking them offshore.Gabriel Zucman: [00:23:54] Exactly and what might also happen is that instead of competing by offering low tax rates as countries do today, a very negative form of international competition, we would move to a more positive form of competition, where countries would compete by providing the best infrastructure for companies or by having the most productive workforce thanks to good universities, good schools, good hospitals. So that's how globalization could look like. You know it's good to have some competition but the form of competition that we have today, which is you know countries are competing by slashing their rates, a very negative and bad form of competition. We could have a much more positive form of competition once you put taxes out of the picture.Lisa Kiefer: [00:24:46] So this would require cooperation amongst countries and just the will to do this.Gabriel Zucman: [00:24:52] Yeah and look there's already a lot of international economic cooperation. We've made a lot of progress. For instance, when it comes to trade agreements, some of that is is unraveling today with the Trump administration. But if you take the longer view. We've made tons of progress. Reducing tariffs in terms of facilitating access Lisa Kiefer: [00:25:14] Access to data which helped you with this book.Gabriel Zucman: [00:25:16] Exactly, in terms of access to data, so does there is international coordination. But the problem is that there's way too little coordination on the tax rates themselves. So for instance when countries talk about free trade agreements these days, these free trade agreements are essentially about property protection, protecting the rights of foreign investors and dispute resolution settlements. So know how to protect the rights of investors, but property cannot come with only rights and no duty, no, property also comes with the duty to pay taxes. And so the way to make progress, to reach an international agreement on taxes, in my view. is to put taxes at the center of free trade agreements, is to say, we are not going to sign any of any new free trade agreement if it's only to guarantee new rights to investors and ignores taxes. Any new free trade agreement should have taxes at the center stage and that's how it would become possible to make quickly a lot of progress in terms of tax coordination.Lisa Kiefer: [00:26:19] And that's also true when you think about the constitutionality of any tax reform here in this country, it's going to require the will and the cooperation of our legislatures. It can happen.Gabriel Zucman: [00:26:32] Yeah it can happen because the current situation is is similar in many ways to the discussion during the Gilded Age in the late 19th century early 20th century. Inequality was rising a lot with industrialized nation, with urbanization, you know huge fortunes were being created. And second, the tax system was very unfair. At the time, the only or the biggest federal tax was the tariff. So taxes that essentially exempted the very wealthy and that that made the price of goods more expensive and so that hurt the working class, the middle class. The situation today is pretty much the same. Inequality is rising a lot, the tax system is less regressive than than during the Gilded Age, but this is much less progressive than what people think it is. During the Gilded Age you have all these debates about the creation of a progressive federal income tax. The 16th Amendment 1913 allows the federal government to levy progressive income tax and it was a huge success. So the income tax very quickly became extremely progressive with rates in 1917 of close to 70 percent. So it's it's a huge change in just a few years. In 1912. There's no income tax. People say it would never happen. It's unconstitutional. You know there's no way this is going to become reality. And then in 1913 the constitution changes. 1917, ,70 percent of marginal income tax rates for the highest earners. So I'm not saying that the same process is actually going to happen for the wealth tax today. But when I look at history, I see dramatic U-turns and changes and reversals and retreats so the history of taxation is far from linear. There is progress and that's what fundamentally makes me optimistic about the possibility for change and for reform.Lisa Kiefer: [00:28:27] Well when 50 percent of the population makes eighteen thousand five hundred dollars a year, it's untenable. You created a Web site. Tax Justice now dot org. That's all one word.Gabriel Zucman: [00:28:40] We developed this website to make the tax debate more democratic, because it's not for economists, it's not for experts, to say what taxes should be. It's for the people through democratic deliberation and the vote. And we want to give the tools, the knowledge, to the people. So it's a tool for the people to simulate their own tax reform. It's user friendly, it's very simple to use. Everything is is transparent. It's fully open source, with all the code you know online for people who want to dig into this. But the Web site itself is extremely simple. You don't need to be an expert or to know anything about economics. What the Website does is two things. One, it shows how regressive the U.S. tax system is today. When you take into account all taxes paid at all levels of government, the website shows what the effective tax rate for a group of the population and how it has changed over time. And then you can change taxes. You can change let's say the top marginal income tax rate. You can change a corporate tax rate. You can create new taxes like a wealth tax, change the rates, change the exemption threshold. And the website shows how this would affect the progressivity of the tax system, one. And second, it shows how much revenue would be collected. So let's say you want to fund Medicare for All, or free college, or student debt relief. These things have a cost and there's several ways to fund these things. And so the user can very simply say OK, with that combination of taxes, with that tax refund, I can collect enough revenue to do these important policy changes.Lisa Kiefer: [00:30:24] Obviously you guys have plugged in all the numbers and come up with the ideal type of tax and you call it the national tax. Can you describe that and how it might be different from or in addition to a wealth tax?Gabriel Zucman: [00:30:37] The idea here is, how do we fund universal public health insurance and more broadly how could the U.S. increase its tax collection in a sustainable manner? The way that European countries do this is with value added taxes which are taxes essentially on consumption, better than sales taxes, but still pretty regressive because they're only on consumption and the rich consume a small fraction of their income whereas the poor consume most or even sometimes more than 100 percent of their income. And so what we are saying is look the U.S. doesn't have to introduce a V A T --A value added tax like other countries, it can leapfrog the V.A.T. and create a new tax which like the V.A.T. can collect a ton of revenue, but can do it in a much more progressive manner. And we call it the national income tax. And so the idea is for instance, if you want to fund Medicare for all. Step one is you convert the premiums into wages and so everybody's wage increases by thirteen thousand dollars. Step two, maybe year or year three. You create this new national income tax, which essentially is a tax on all labor costs and all profits made by corporations. So it's the broadest possible form of income taxation. And the beauty of it is that because it's so broad with a tax rate of only 5 percent, you can generate a lot of revenue, enough to replace all the insurance premiums that employers pay today.Lisa Kiefer: [00:32:20] What about education?[00:32:20] And you can increase the rates, go to 6 percent or 7 percent and that generates a lot of revenue that can be spent on early education, an area where there's nothing in the US in terms of public spending essentially, something municipalities do spend some money, but the U.S. is at the bottom of the international ranking when it comes to a public child care and early education in general. So that's a high priority. It's easy to collect a percent of GDP with that national income tax to fund universal early education. It's easy to collect an extra 1 percent if you want to make public universities, much more progressive than than anything else that exists.Lisa Kiefer: [00:33:01] And it's still less than what I would be paying today.Gabriel Zucman: [00:33:03] Of course.Lisa Kiefer: [00:33:04] Way less!Gabriel Zucman: [00:33:05] That's the beauty of it because today you're paying so much in child care, for college, for health, in a way that's very unfair because it doesn't depend on your income. It's the same amount essentially for each individual.Gabriel Zucman: [00:33:22] Essentially what's at stake is the future of globalization and the future of democracy. If globalization means ever lower taxes for its main winners, big multinational companies and their shareholders, and at the same time, higher and higher taxes for those who don't benefit a lot from globalization or sometimes suffer from it, retirees or small businesses, then it's not sustainable, neither economically nor politically. The problem with high and rising income and wealth inequality as as the Founding Fathers themselves understood at the time is that excessive wealth concentration corrodes democracy, corrodes the social contract, and we're seeing this today when you look at, for instance, what has been the main piece of legislation of the Trump presidency so far, it's been a big tax cut for wealthy individuals. So you've had three full decades of rising inequality and then on top of that, a law that adds fuel to that phenomenon. And it's hard to analyze this other than by saying that it reflects a form of political capture of plutocratic drift. That's the reality of the U.S. today and so if democracy is to prevail, and if we want to have a more sustainable form of globalization, we need to tackle this issue of tax injustice.Lisa Kiefer: [00:34:53] Thank you for being on the program,Gabriel.Gabriel Zucman: [00:34:56] Thank you so much for having me.Lisa Kiefer: [00:34:58] The book is The Triumph of Injustice --How the Rich Dodge Taxes and How to Make Them Pay. The website: TaxJusticeNow.org and you also have a profile in the October New Yorker which is really great reading. So thanks again for being on the program.Lisa Kiefer: [00:35:24] You've been listening to method to the madness, a bi weekly public affairs show on KALX Berkeley celebrating Bay Area innovators. Today's guest was Gabriel Zucman, professor of economics and public policy here at UC Berkeley. We'll be back again in two weeks. See acast.com/privacy for privacy and opt-out information.

En Resumen de proyectOrinoco te propone una síntesis del libro que está revolucionando el debate sobre la desigualdad económica y la justicia social en los Estados Unidos: El Triunfo de la Injusticia, de los economistas Emmanuel Saez y Gabriel Zucman. Con El Triunfo de la Injusticia, los economistas Emmanuel Saez y Gabriel Zucman hacen una contribución fundamental al debate acerca de la importancia del sistema impositivo como motor de la justicia o, por el contrario, de la desigualdad social. Saez y Zucman, ambos profesores de economía en la Univeridad de California, Berkeley, hacen un estudio de la génesis y la evolución del sistema impositivo de los Estados Unidos, gracias al cual demuestran que la economía de ese país logró ser tanto más próspera cuanto que adoptó un sistema impositivo altamente redistributivo. Fue cuando invirtió masivamente en educación y salud, gracias a la contribución colectiva permitida por un sistema de impuestos progresivo, que la sociedad estadounidense alcanzó la abundancia y el bienestar. Partiendo de esta constatación, Saez y Zucman hacen una crítica frontal del giro neoliberal de los años 80 operado por Ronald Reagan, y de las políticas de reducción de impuestos de las cuales Donald Trump se ha hecho el paladín. Tal y como lo demuestran Emmanuel Saez y Gabriel Zucman, estas políticas no sólo fomentan la desigualdad social, sino que socavan las bases mismas de la prosperidad. Inspirados por el New Deal que otrora impulsó Franklin Delano Roosevelt, Saez y Zucman formulan una actualización de sus postulados con el fin de adaptarlos a la economía globalizada y digital del siglo 21. "Los impuestos son el precio a pagar por una sociedad civilizada". Tal es la máxima de Roosevelt que Saez y Zucman deciden enarbolar, y que retumba como una urgente invitación al cambio en nuestras sociedades latinoamericanas, plagadas por la desigualdad, azotadas por la violencia y enlodadas en el estancamiento económico. Para profundizar, descarga nuestro resumen escrito en: https://www.proyectorinoco.org/enresumen/El_Triunfo_de_la_Injusticia.pdf https://youtu.be/HcvSzOjGseg

Gabriel Zucman, an economics professor at the University of California, Berkeley, discusses wealth and inequality in America with Tax Notes contributing editor Nana Ama Sarfo. He co-authored the book The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay with Emmanuel Saez.For additional coverage, read these articles and opinion pieces in Tax Notes:A Better Alternative to Wealth TaxesThe Zucman Mandate: Life Without VATTax History: Saez and Zucman Exaggerate Redistributive Impulse in U.S. Tax HistoryWealth Tax Comparisons to Estate Tax ‘Not Fair,’ Panelist SaysU.S. Well Positioned for Wealth Tax, Economist SaysEconomic Analysis: Risking the Wrath of 900 Billionaires

»Når folk beskylder os for at rykke partiet til venstre, må jeg svare, at vi ikke rykker partiet til venstre. Vi flytter partiet hjem.« Sådan siger den amerikanske socialist Alexandria Ocasio-Cortez. Og hun har ret, mener chefredaktør Rune Lykkeberg. Han har læst den nye bog The Triumph of Injustice – How the Rich Dodge Taxes and How to Make Them Pay af de to franske økonomer (og rådgivere for Elizabeth Warren) Gabriel Zucman og Emmanuel Saez. Den ser på udviklingen af det amerikanske skattesystem, fra dengang det var verdens mest progressive, til i dag hvor de allerrigeste ifølge forfatterne har et lavere skattetryk end en helt almindelig amerikansk lønmodtager. Der er bogmesse i weekenden. Og mon ikke man ikke kan finde Jussi Adler Olsen på en scene et sted. I 2011 var han at finde på alles læber. ’Jussimania’ havde ramt landet, skrev Jyllands-Posten, og han modtog boghandlernes pris, De Gyldne Laurbær. Krimien kom på de fines bord, men blev den fin af det? Vi er nået til 2011 i vores litteraturhistorie 20 før 20. Tue Andersen Nexø er i studiet.  Du skal da for resten komme forbi os på Bogmessen. Se det samlede program på Informations scene her. Ulrik Dahlin kommer også. Han han nemlig undersøgt, hvor mange der egentlig får dispensation på grund af handicap ved ansøgning af statsborgerskab: Kun én procent af alle ansøgere under Mette Frederiksens regering. Til sammenligning fik 96 procent af ansøgere dispensation under Thorning-regeringen.

Should the richest be taxed out of existence? Manuela Saragosa hears from Emmanuel Saez, a US-based French economist advising US presidential hopeful Elizabeth Warren on a wealth tax targeting the super rich. The arguments against taxing billinaires more come from Chris Edwards, an economist at the libertarian Cato Institute in Washington DC. (Photo: Bill Gates and Warren Buffet at an event in 2017, Credit: Getty Images)

Grace Blakeley, author of Stolen, on where financialized capitalism came from and how we could get out of it. Then, economist Emmanuel Saez, co-author of The Triumph of Injustice, on how the rich got richer while paying less of their income in taxes than the working class (Tax Justice website here).

Emmanuel Saez and Gabriel Zucman are the UC Berkeley economists behind Bernie Sanders' and Elizabeth Warren’s tax-the-rich tax plans and the authors of the new book “The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay.” Joe talks to Saez in his campus office. Learn more about your ad choices. Visit megaphone.fm/adchoices

I talk with EMMANUEL SAEZ, UC Berkeley economist, about his newest book, THE TRIUMPH OF INJUSTICE: How the Rich Dodge Taxes and How to Make Them Pay - co-authored with Gabriel Zucman. The pair grabbed headlines when their book reported that in 2018, for the first time in history, America’s richest billionaires paid a lower effective tax rate than the working class. Their solutions include a wealth tax, and they’ve advised Elizabeth Warren and Bernie Sanders on their proposals. You can learn more at taxjusticenow.org

Income inequality in the U.S. has reached a five-decade high, according to data from the Census Bureau. Debates over why this is happening and how to address it have taken center stage in the Democratic debates, with Senators Bernie Sanders and Elizabeth Warren calling for a wealth tax while other candidates are pushing back. Emmanuel Saez joins Julian Zelizer in this week’s episode to discuss the erosion of the progressive tax system, which Saez and co-author Gabriel Zucman detail in their new book, “The Triumph of Injustice: How the Rich Dodge Taxes and How to Make Them Pay.” While the individual income tax is still progressive, Saez argues that other taxes, such as the sales tax and payroll taxes, make the tax system regressive as a whole. Saez is a professor in the Department of Economics and the director of the Center of Economic Growth at the University of California, Berkeley. Prior to joining the Berkeley faculty, he was an assistant professor of economics at Harvard University. His research focuses on taxation, redistribution, and inequality. Jointly with economist Thomas Piketty, Saez has constructed long-run historical series of income inequality in the U.S. that have been widely discussed in the public debate.

Michael Strain is the director of economic policy studies at the American Enterprise Institute. Previously, Michael worked in the Center for Economic Studies at the U.S. Census Bureau and in the Macroeconomics Research Group at the Federal Reserve Bank of New York. He joins the show today to talk about recent developments in U.S. economic policy and some of his work on that topic. David and Michael also discuss the consequences of rising populism, MMT’s impact on tax policy, and the issues Americans should be most worried about.   Transcript for the episode: https://www.mercatus.org/bridge/podcasts/03042019/populism-mmt-and-billionaires   Michael’s Twitter: @MichaelRStrain Michael’s AEI profile: https://www.aei.org/scholar/michael-r-strain/   Related Links:   *Economic Shocks and Clinging* by Michael Strain and Stan Veuger https://ideas.repec.org/p/aei/rpaper/1004842.html   *Wealth Inequality in the United States Since 1913: Evidence from Capitalized Income Tax Data* by Emmanuel Saez and Gabriel Zucman https://gabriel-zucman.eu/files/SaezZucman2014.pdf   *Going to Extremes, Politics After Financial Crisis: 1870-2014* by Manuel Funke, Moritz Schularick, and Christoph Trebesch https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2688897   *Modern Monetary Theory is a Joke That’s Not Funny* by Michael Strain https://www.bloomberg.com/opinion/articles/2019-01-17/modern-monetary-theory-would-sink-u-s-in-debt   David’s blog: macromarketmusings.blogspot.com David’s Twitter: @DavidBeckworth  

Alexandria Ocasio-Cortez rise within the Democratic Party has been unprecedented. A recent poll published by NBC news shows that 75% of Democratic or Democrat leaning voters would vote for her in a presidential campaign. This in spite of the fact that, at age 29, AOC isn't eligible to run until she is 35. What's behind her surge in public support? Her Democratic Socialist platform promises everything under the sun to everyone and proposes to pay for it by taxing the rich and redistributing income. Again this is promise of a kinder and gentler face of Socialism today; the old school dictators are genocide are gone from today's Socialist movement or so we are told. That's simply not the case as a January 22, 2019 New York Times editorial shows. The piece written by Emmanuel Saez and Gabriel Zucman, both economics professors at UC Berkely, demonstrate that Socialists still embrace the Dark Side of Socialism, which begs the question can the Darth Vader's who were responsible for genocide, be far behind? Saez and Zucman openly state that the true value of Ocasio-Cortez's plan is not simply that it soaks the rich (their words), but that it controls free markets, which restricts the accumulation of unjust wealth and the exploitation of marginalized people. This exploitation and injustice tears apart at fabric of society, and threatens the existence of democracy. Their definition of democracy is one in the same with that of Valdimir Lenin, the original Darth Vader of socialism who's Russian Revolution initiated the use of concentration camps to target those who practiced exploitation and opposed the Socialist State. As a result 66 million people died in the Soviet Union. There is a battle two different concepts of democracy here in America, a Socialist form that seek to control free markets and conquer a perceived exploitation vs one that believes individuals have the right to self determination within free markets and free society. In the past the Darth Vaders of Socialism murdered over 100 million people in defense of Socialist Democracy. Only history will tell us if the Darth Vaders will rise once again against those who oppose socialism.

    Todd Bartoo director, the writer for Killing Joan and Emmanuel Saez director, the writer for Angels vs Zombies (Dark Patch) are our featured exclusive interviews. Intro: 00:13 Movies Kevin Bacon To Produce, Star You Should Have Left 02:31 Is Zak Bagans creating a Charles Manson Documentary? 06:56 Hex Studios Launch 'Hex Presents' on YouTube 12:58 Todd Bartoo Interview 14:56 Emmanuel Saez 55:41 Trailer First impressions The House with a Clock in Its Walls 96:45 Boar 101:51 Llamageddon 106:26 Outro 110:52  

What follows is an edited transcript of my conversation with Vincent Geloso. Petersen: My guest today is Vincent Geloso of the Free Market Institute at Texas Tech University. Vincent, welcome to Economics Detective Radio. Geloso: It's a pleasure to be here. Petersen: So the paper we'll be discussing today is titled "A U-curve of Inequality? Measuring Inequality in the Interwar Period" which Vincent has co-authored with John Moore and Phillips Schlosser. The paper casts doubt on the claim from, most notably, Thomas Piketty and others that inequality fell from the 1920s to the 1960s and rose thereafter. So, Vincent let's start by discussing the inequality literature prior to this paper. What is this U-curve and where did it come from? Geloso: The U-curve is probably the most important stylized fact we have now in the debate over inequality and the idea is that, if you look at the twentieth century, there's a high point of inequality in the 1910s, 1920s and then from the 1930s onwards up to 1970s, it falls dramatically to very low levels and re-increases thereafter, returning to 1920s-like levels of inequality. So the U-curve is the story of inequality in the twentieth century. It's mostly a U.S. story because for other countries it looks less like the U-curve than an inverted J. So it's higher in the 1920s, it still falls like in the U.S. but really increases much more modestly than the United States in places like Sweden, or France, or Canada. But the general story is that there was a high level of inequality at the beginning of the century well up to the mid-second-half of the twentieth century and it re-increased in the latter years and then we have been on a surge since then. Petersen: So, a lot of this is coming from Thomas Piketty, who of course wrote the surprising bestseller "Capital in the Twenty-First Century." Could you talk a little bit about where his data came from? Geloso: Okay, by the way, this is where there's a failing on my part which I think I always find funny; an anecdote to tell about Piketty. I'm originally from Quebec, so I am a French-Canadian, I speak fluent French. His work started coming out in French first and I initially started to write elements of the paper we're discussing today back when it was only in French. And then I told myself, "There's no point, it's only a French book, nobody reads French. What's the point of writing a paper about a book that no one will read?" Biggest mistake of my career, I guess, not writing that paper before. But anyways, besides that, his entire argument is based largely on his most influential paper---which I think was published in 2003 in the Quarterly Journal of Economics---which was using tax data. So, the records, the fiscal statistics to create measurements of income inequality in the United States and the advantage of that is that since the income tax started in 1910s you've got a long, long period of measurement of income inequality with the same source. So it's a great advantage because a lot of the people before like Kuznets, like others had to use residual estimates, different sources, they were amalgamating different sources together and it was always a problem because you couldn't create one homogeneous time-series of inequality. You could get a rough idea and there's a few papers---for those who read economic history stuff---there was a paper by Lindert and Williamson in the 70s in research in economic history and you can see their first graph in that paper was a series of different measures of inequality. They were all pointing to the general similar shaped curve but they were all from massively different statistics, different sources. So one was the 50:10 ratio of earnings, another one was a measure of income, the other was wages and they are all different measures, they are not perfect. You can get a good idea, a rough idea but you cannot have a continuous time estimate which is what Piketty innovated by using the tax-wealth with Emmanuel Saez, recreating this long continuous trend in data from 1917 to the modern day. And they keep updating it regularly to include the new data on a yearly basis. Petersen: So tell me about tax avoidance. How does that affect things? Geloso: Okay, this is where the existing data that all the different sources had---Piketty made advancement. Rather than having variance across different sources, he was eliminating that variance. But there's still an issue of variance within a source. So it's not because you have used a homogenous source that the quality of the data contained within the source is consistent. There's actually quite a lot of variance in data quality because of the way the tax system was done. So a lot of the debate today for the data for today has been---has there been such a large increase in inequality as Piketty and Saez and Atkinson and others have been pointing out? And the reason for that was largely because, as Alan Reynolds, as Joel Slemrod, and a few others have pointed out, the tax changes of the 1980s were so large that people shifted the way they reported income. They changed the way they reported tax liability. What used to be classified as corporate income became classified as individual income, and so you get an artificial increase because of a way the tax system has changed. And this is why a lot of people say, as soon as you correct for the effect of changes in tax reporting behavior, you actually get a much more modest increase of inequality. But that's from 1980 to today with a massive tax change in the 1980s. If you go back further in time, to the interwar period the tax changes are much more dramatic. In 1913, the tax rate was 7%, went up to 15% in 1916 to 73% until 1921, went back down to 24% by 1929, went back up to 79% by 1939. Imagine, that's a lot of movements in the way taxes will affect behavior and it will affect reporting behavior. So, will you report, will you be as honest as you would be when you're filing taxes at 79%, as you are when you're filing taxes at 24%? So you're getting---because of these massive changes in tax regimes that are happening over very short periods of time---these massive changes affect the quality of the data set that Piketty is using for the left side of his U-curve. The left side of the U-curve is probably inaccurate to a very high level because of tax avoidance, and this is where the economists in general failed to talk to historians because there's a few papers out there that did measure---especially in the Journal of Economic History---that did measure changes in reporting. So changes in tax avoidance occur basically to a large level by the top incomes, as Gene Smiley argues in the Journal of Economic History, for example, which Piketty has never cited neither Saez, neither anyone in the debate. And he did corrections, so he checked: Okay, when a tax rate went down from 73% to 24%, did people change their reporting behavior? Did more rich people start to report incomes? And the answer is 'yes.' And as soon as he started doing corrections for that to control the "artificialness"---if that's a word---of the tax changes on affecting the level of inequality, he actually finds that the 1920s have a much lower level of inequality because of the reduction in tax rates and there was very little upward trend, especially when we're comparing with the Piketty, with the Mark Frank data, with the Kuznets data and it shows that as soon as you adjust for tax avoidance the left side of the U-curve flattens dramatically and it looks more like an L---an inverted L---or a J, but it doesn't look at all like a U-curve and that's just tax avoidance for the 1920s. The increases in the 1930s in tax rates would have had the opposite effect where people would have reported less income. So, the level of inequality in the 1920s is overestimated in Piketty and it's underestimated for the 1930s. So you're kind of flattening the entire interwar period as soon as you consider the one issue of tax avoidance. And there are estimates out there in the Essays in Economic and Business History by Gene Smiley and Richard Keehn. Smiley's article in the JEH, which has been ignored in the literature, but which did check that people at the top of the income distribution are generally very sensitive to changes in tax regime in the way they report their tax liability. Petersen: So, today they would do that by maybe registering---having their money in the Cayman Islands or Ireland or the Isle of Man, their tax shelters abroad. Was the avoidance different in the 1920s? I expect it would be harder to enforce taxes given that the income tax was so new and there were all these changes and they didn't have electronic records, or how did it work? Geloso: You're thinking of avoidance in a very negative term which is the illegal part, which is what has somewhat permeated the public debate and I have this reflex myself. I think of avoidance always in that way. But avoidance is sometimes just planning your taxes, your sources of income, differently. One example would be---and it's not really applicable to our case---parents can put their kids on company payroll because it's cheaper dollar for dollar relative to giving them an allowance from after-tax personal income. So, people can change their behavior in their way to get money, in the way they report their income. So you can pass corporate income as a personal income or personal income as corporate income. You can deduct expenses one way or another. And one way or another it comes to affecting the quality of the data set. And it does matter, because if you look at the 1980s when there was a rapid change in the income tax rate, which was much more important a change than the change in the corporate tax rate, it led people to change the type of incorporation they were in, so they became S corporations, so corporations that were not subjected necessarily to the corporate income tax. So, it affected the way people reported, classified their income and it appears artificially the income inequality statistics. The 1920s' equivalent was municipal bonds. Municipal bonds were assets that delivered incomes but they were not subjected to taxes so this was like a tax shelter that was completely legal and that rich people used in dramatic amount to reduce their tax liability. So, when people think of tax avoidance it's generally this idea that people just reorganized their classification of income to make sure they have the smallest liability possible and in a situation like that, what you get is a much different level and trend of inequality because of the changes in tax regimes that induce changes in tax reporting behavior. Petersen: So is Piketty not adjusting for this at all? He's just taking the tax data at face value? Geloso: He's trying some stuff but he gets a lot of the tax history quite wrong and what alerted us to this is that Gene Smiley's paper, which is not in an obscure journal, it's in the Journal of Economic History which is considered a top tier journal in the profession of economics---it's not AER, it's not QJE, but it is a very respectable journal. And Smiley's article is also very cited. There's a large number of citations of that paper and Piketty just ignores it. And you skim through his book and the discussion is always brushed aside and these effects of changes in tax regimes is always minimized as if it was not important. But tax avoidance is only like a fraction of the problem, because if you look, there's another issue that's much more dramatic than tax avoidance. Alone the issue of tax avoidance, if you take Smiley's stuff, changes the narrative dramatically but that's just our first shot in this debate with me, John, and Philip. It's our first shot, the second shot is that filing requirements were nowhere close to what they are like today. And actually this is something funny, the idea of Piketty is that you can create a series assuming tax compliance for a country that was founded on a tax revolt which is---for a historian---kind of a weird assumption built in the way he does his history part. And if you look at it, one of the example is that you look at the changes in wages of people---wages for unskilled workers, wages for mining workers, for agricultural workers---they do not evolve at all like his bottom 90% of income behaves, it behaves actually very differently. So, in our paper we show that the quality of what's at the bottom of the income distribution is dramatically different, so wages go up much faster than the income of the bottom 90%. And this is wages. So, you think what, maybe hours are going down? No they're not in the 1920s and 30s---well in the 30's they're going down---but in 1920s hours are actually staying stable and in some industries are actually slightly increasing. So you should not see what Piketty's data suggest, which is that there was stagnation in the income of the bottom 90%. There was declining unemployment, there was rising wages and hours remaining relatively stable. It's impossible to reconcile these facts with those of Piketty without considering that there might be problems in the way people filed their taxes. And this is where the entire thing breaks down and you look at, for example, the number of tax filers that were actually there. And you look at that as a percentage of the American population, up to the 1930s---so until the Second World War---there's never more than 6 or seven 7 percent of population that files in tax reports. Petersen: And you'd expect it to be the wealthier people too, who are filing right? Because you have people below a certain income, they don't file income tax, right? Geloso: Exactly. This wouldn't be a problem if your distribution of people behaved equal to the distribution of the general population and the movements were the same. It wouldn't be a problem. The thing is when you look at the number of adjusted tax returns which is what Piketty and other people like Estelle Sommeiller or Mark Frank do. They try to re-correct this issue of a very small number of tax reports that were actually filed in and they get an idea---and this is figured too, I think, in our paper. There's a steady upward trend in the number of adjusted tax units but when you look at the actual number of tax units it moves so much. It goes up and down and it doubles in the span of two years, then it reduces by half in the span of another two years and these are such large movements in the number of tax units that it's hard to see that this might be a representative sample of the American population. Differences in reports and such changes in our reporting---and the number of reports I should say---suggest that there is actually a problem in the quality of the data. And this is where we're saying that if you combine this with the observation that wages were increasing, unemployment was falling, and that hours were more or less stable, and that you add this fact of the massive changes in tax returns, you can easily question the quality of the data from the 1920s and the 1930s. This is where we're coming in and we're saying, no, the people who reported taxes were very volatile. They were rich people who reacted to changes in income taxes. Lower income individuals also were very much tax resisters. There's an entire story told by David Beito. I think it's with University North Carolina Press. He has a book on tax resistance in the United States during the 1920s and 30s and there's actually a large documentation of anti-tax leagues that have massive memberships of common individuals who are resisting filing taxes at that time. So it's quite plausible to say that, if there's such a difference in wages, in hours, in unemployment what they and these massive changes in the number of tax returns filed, it suggests that probably the poor people just didn't file in their taxes. So, any movement at the bottom of the distribution does not exist according to Piketty's data. But there were movements at the bottom. There were people who moved from poor Kansas to Illinois. They were still in the bottom 90% but by moving from farming Kansas to Chicago to work in a garment industry, they get a gain in income but that is not captured in Piketty's data because it's highly likely that poor individuals tended to file fewer tax returns and were probably more hostile to filing them, and the rich were just reacting to changes in tax regimes. So, the tax filing requirements would actually lower the level of inequality overall from the 1920s and 1930s. So, the tax avoidance issue would change the trend and the issue of tax filing requirements would drop the level because we're not capturing bottom incomes properly. So you're changing the U-curve progressively as each of our critiques is embedded in the argument you actually progressively bring down the left side of the U-curve and it looks more and more like a J, or an L, or a hockey stick. Petersen: I remember in 2012 Mitt Romney got in trouble for pointing out that 47% of the population doesn't pay income tax. So if Mitt Romney were running for president in the 1920s, I guess he would have said something like 94% of people are not filing and paying income taxes. Is that right? Geloso: Exactly. That would be a very accurate. Well it's 94% of people. The taxes were based on households, but still 6% and then later on after the Second World War it jumped above 40%. So there's a massive change not only in tax regimes in terms of rates, but filing requirement regimes, which will also change the tax behavior of individuals. And not only that, this is something that actually, it was buried in a footnote of Smiley's article which is---still I will point out not cited by Saez and Piketty---but it's so rigorous and it contains so many pieces of information that are crucial. Until 1938 public sector employees were not mandated to file in taxes. This is an unknown fact. Until 1938 they did not have to file in taxes. So this is actually a very very big factor. So in terms of wage earners, so not everyone, it excludes farmers, but all wage earners, 12% of them were government workers. This is a substantial share of the workforce and not only that, their earnings are slightly above the rest of the workforce and the increase in their earnings is above those of the other workers in the United States in that period. But they're just not considered in the tax distribution. So until the public salary Act of 1939---which was debated in the Senate in 1938-1939, the 1.2 million federal employees---this is a large number---were drawing large wages and they're just not included in the statistics based on tax data. This has a massive impact on the level of inequality. Public workers were not in the top 1%, they were not the richest, they were not poor and they were earning much more over time. I'm not trying to debate whether it was efficient government spending or if they were paid at actually providing public goods that people actually did want. But set that issue aside, they had higher wages than the average representative of a sizeable share of the workforce and their wages increased much more importantly than other ones. So you're affecting the trend. You're affecting the level and you add this other issue and then look again, imagine the U-curve in your head. Tax avoidance, it changed the trend. It made it less, it made it much lower in the 1920s than it was. It increased it relative to the Piketty data in the 1930s. The entire level then is reduced by adjusting for tax filing problems and then if you tried to adjust the issue of public sector employees who didn't have to file in their taxes you drop the level again, so it's looking less and less like a U-curve than what Piketty claims. So, we haven't made all these adjustments, we're just stating facts that should be known in the inequality debate. Our goal is later on to test each of our points. We're sending such a large number of criticisms that there's bound to be one that sticks in terms of the data quality. Because these are such huge data quality that it effects a major stylized fact about inequality: the U-curve. If today we believe that the U-curve---there's a debate over whether or not there's been such a large increase---everybody agrees that there's been an increase, but there's a massive debate over how big this increase is today. Imagine how crucial it would be to correctly debate the level of inequality and the trend of the left side of the U-curve. And if we're having all these debates with all the survey data, all the census data, all the private big data stuff that we have out there for the modern era and we still have high level of uncertainty, imagine anything with all the points I've mentioned for the interwar period, the left side of the U-curve. Everything seems to indicate that's probably much lower. I'm not saying there's not a U-curve, maybe it looks like a ball, a very modest ball, or there's a slight decrease, there's a slight increase, but it's not Piketty's U-curve, it's not the same stylized fact. And it changes the narrative we should have about inequality. Petersen: Yeah, I'll never forget one experience I had. It was the original Occupy movement and I went down to see the protests going on in Victoria B.C. where I was at the time and one guy just had a big sign where he had printed off a graph. You know, an inequality graph of the 1% versus the 99% from Piketty and Saez. I'm not sure if it went all the way back to the 1920s but really, that's sort of a very clear sign that these debates are expanding beyond academia and having a big effect on the public and their perception of the world we live in, the ideal policies that we should be pursuing. A big part of the U-curve narrative is to say look at how successful the policies in the 40s and 50s were at reducing inequality and of course if we do away with this U-curve then maybe those policies, all they did was bring more people into the data set. Geloso: Yes, and it changes who reports in the data set. I know Phil Magness, who is joining our team with me and John Moore and Bill Schlosser. Phil Magness has been working on showing that a lot of the changes in our tax regime actually just mimic the entire movement of the income share of the top 1%. It follows what share of taxes they're asked to pay and it leads to changes in reporting and basically it's a story of tax regimes and it changes the entire narrative. But what I find much more depressing---and this is a depressing fact---if just one of our criticisms lands and sticks, the U-curve doesn't look like a U. Let's say it looks like a J. So there's a mid-point in the 1920s and we've been increasing since then at a relatively high rate since the 1970s. So it fell from 1920 to 1970 and then it re-increased. If you look at what caused the leveling from 1920 to 1970, a lot of it has nothing to do with state intervention, with the efforts at redistribution. There's probably a sizable share of it that has to do with that. But there's also a sizable, and probably the larger share, that comes from poor regions catching up with rich regions. If you look at for example the history of inequality in the United States you would see that if you decompose the variance---so what caused the inequality---for most of American history a large share of inequality was caused by differences between states rather than differences between individuals. One way to see it, and I'm making a caricature here to get the point across, but you could have the same shape of distribution in income in Kansas and New York. But since the average in New York is much higher than in Kansas, you average the two in, you get a much higher level of inequality, so you can get like a Gini coefficient for the two of them of .4 but in each of them individually taken the level inequality is like .2. And this is what happens for most of US history. There are massive gaps between regions rather than gaps between skills, between levels, so Mississippi is poorer than New York for a long period of time. But in the 40s, 50s, 60s, 70s this gap basically volatilized, it began to disappear. One of the massive story of the twentieth century---some economists are aware---is this massiveness of convergence between regions. So the South gets richer. Poor black people move from poor states in the South where they're sharecroppers, they move to the North where they become wage earners in garment factories, in manufacturing and their earnings grow dramatically. So there's a massive convergence during that period. But, if you think about it for a second, it means that the gap between regions and the gap between races is actually a big driver in the leveling part of the U-curve, but that has nothing to do with tax redistribution. It has nothing to do with this. So, as soon as we integrate our criticism into the tax data, and we show that the U-curve looks less and less like a U, the left side of it makes it look less and less like a U. And you consider these two economic history facts that I've just mentioned, it's incredibly depressing to consider in the inequality narrative, to say well a lot of it is just stuff that would have happened anyways. There would have been a decline in inequality regardless of how much the state intervened to redistribute income because there was this convergence. And not only that, the leveling of inequality was not as great as we say it was. So it changes the entire story. We have inequality and how to address the issue and, not only that, I will point out that across the same period the one thing that goes up relatively steadily is government spending to GDP. If you were to account for all our criticism and then consider which part of inequality was reduced by government redistribution, it becomes more and more depressing because it seems like the effect is much smaller than people believe. This is where we're trying to disentangle all these elements to tell the correct story of inequality in the United States and it starts with getting the shape of inequality right. But look at the story I have just told you. As soon as we make this small change of properly assessing things, the entire narrative we have then changes. And this is why it's a dramatic fact to get right and which is why we're somewhat disappointed with Piketty's stuff because he's not making the right level of methodological discussion. Petersen: Right. Piketty uses his narrative to push for large-scale taxes and redistribution. Geloso: Yes. I'm not saying that what he does is bad. It was a massive improvement relative to what was there before. But his story has flaws, and these flaws tend to support his narrative. We point out the flaws that would support a different narrative, that point out that probably inequality is not as high as we say. It probably would have fallen up in the 1970s because of very natural forces and if you think about the fact that since the 1970s there's been a slight divergence---so, imagine the leveling of inequality between regions in the United States. The divergence fell until the 1970s, but it has increased modestly since then because of regulation on housing, things that limit mobility across states that the depress income growth in some areas. So you end up with a slight divergence since then and it is caused by states. It's not caused by anything that the government is doing. It's really an issue of very regionalized factors and each time you consider each of these nuances in, the narrative changes. And it changes dramatically against the story Piketty's telling and it shows that the flaws are biased in favor of the conclusion he supported. Petersen: Right. And I know Phil Magness has really criticized him on this, that he makes a lot of decisions where you could go one way or the other and they always seem to turn out his way. Which is maybe a coincidence, or maybe it's not really the best way to do social science. You point out that there were big price differentials between regions so how does that play into the regional inequality story? Geloso: So, we're basing our discussion on this part of a longer series of papers where each of the points we've discussed will basically be one paper in itself. Here we're just stating this entire case for skepticism, then we'll see how big the impact is. Regardless, even if they're all minor, they will all change the narrative. And prices, regional price differences are an issue in that. So, when you compare nominal income across a country you are getting an idea of inequality but---you will agree with me. So, you're in Vancouver. I'm originally from Montreal. If I give you a dollar income in Vancouver and I give myself a one-dollar income in Montreal you think that dollar will go as far in Vancouver as it does in Montreal? Petersen: I think it probably won't. Geloso: Exactly. So you would expect that regional price differences will affect the level of inequality. And there's actually a lot of people that do that. Each time you make controls for the level of price differences, you actually find that the level of inequality falls modestly. But it falls. But the thing is, the price differences that we have today between Vancouver to Montreal or between New York and the region of Mississippi are not at all what these gaps used to be in 1920 or in 1925. In 1925 the gaps would have been much, much, much larger and from 1925 to the 1940s there's been a convergence of prices across regions. So for the first 50 years, roughly, of the twentieth century you get a convergence of prices across regions. So if you just took nominal income without correcting for regional price differences, you would get a massive drop in inequality. However, if you were to correct for an increasingly smaller mistake because, if you think about it, if the wage gaps used to be on average 25% in 1890, let's say, and they used to be 5% in 1950, the error is decreasing over time. So you're getting the level off by a smaller and smaller quantity over time. So it means that the trend changes. The smaller your measurement error caused by regional price differences falls, the less pronounced the fall in inequality becomes. So you get a massive drop in inequality as measured by nominal income, which is not what it is when you correct the regional price differences, so you put this in real dollars adjusted for purchasing power parity. And not only that, the errors caused by regional prices actually also follow a U-curve. So the errors that would be caused by price level differences across regions declined up to 1950 but since then they've re-increased. So if before you're getting a lower and lower trend---a lower trend by a diminishing amount of error---that means the right side of the curve, that means the increasing disparity in prices across regions since 1950. It means that you're actually increasing nominal prices using nominal income across the country. You will underestimate the increase in inequality since then. So there are actually massive measurement errors caused by this issue of regional prices. When I say massive, I shouldn't say massive because it's dishonest but it affects both the level and the trends. So it affects the shape of the curve and remember we're making all these criticisms to the U-curve story piece by piece. Each one of them has a small prickly effect on the shape of the curve. As soon as one or more starts sticking---and they're all documented otherwise for other periods---not prior interwar period, not a sufficiently as we'd wish to, which is why we're doing this project of massive data collection. It changes the narrative, changes the story, changes the way the curve looks and it's not much of a U-curve anymore and the proper measurements get you a very different story of the evolution of inequality. And that different story forces you to change interpretations and solutions and the entire structure of the debate must change to reflect the higher level of precision that is required for that debate. Petersen: So. I'm trying to think of why these prices between regions might fall in the first half of the twentieth century and rise thereafter. I suppose a lot of it would be real estate, housing? Geloso: Exactly. So housing markets in the U.S. are more or less freer in the first half of the twentieth century than they are today. So most prices, if you can trade a good across borders it will arbitrage out price differences minus transport, right? So if goods are movable more or less as well, and you find it for food, for TVs, for durable goods, you tend to find that there's actually still convergence. But housing, you can't really move a house. There's actually movable houses but they're not a massive share of the market. So you'd expect less ability---and I'm saying this as a euphemism---but you'd expect less ability for arbitrage with housing. The only way you can do arbitrage for housing is by moving around. So I am in Mississippi and I see super high wages in New York. I move from Mississippi to New York. So in Mississippi there's one more housing unit available and in New York there's one less housing unit available. I've driven up housing prices in New York and I've got higher wages but housing is a little more expensive in New York and then it falls in the region where I left in terms of housing, so that real wages in that region converged. So there's a convergence in real wages by people moving around. The problem now is that, there is very, very, very little ability to move around in the United States because zoning restrictions actually make it harder for people to come and exploit the productivity of large cities like New York. So it prevents this convergence in real terms across regions. So a large part of the increase in inequality needs to be corrected for regional price differences, which is the argument about housing. And this is where it's probably that the soundest part of our argument is that the Rognlie papers that attack Piketty state that a large part of inequality was driven by rents towards housing, so the fact that income derives from housing is increasing importantly as a share of total income and has nothing to do with capital itself. It's really the artificial restrictions on housing. And this is largely the problem the inability of people to move to where wages are the most important. This changes the narrative. So that's why the story of regionally correcting price differences is crucial and it's rarely done over a long time series data set. But given the evolution of prices in the United States since 1900, it will affect the trend dramatically. It will affect the level, the shape, and this is not integrated in the argument. And this is why we're saying in this paper, each time you make a correction to get a higher level of precision, it's getting more and more plausible that the curve of inequality doesn't look like a U, it looks probably like an L, probably like a J, but not a U. So the early period of the twentieth century is not as high as people have claimed and there's probably been an increase since the 1970s. Not as much as some would claim, but the increase seems to have happened. The U-curve is probably just fictional. It is the result of poor controls or variations in equality of the taxes. Petersen: We've discussed the housing issue on other episodes of this podcast but it's sort of a one-two punch to inequality, where the people who, you know, maybe have bought a house in the San Francisco Bay area in the 1980s, have seen the value of that house skyrocket. And so of course that would contribute to the upper end of that wealth distribution. And the people who live in Mississippi and might like to move to the San Francisco Bay area and work for Google, can't afford to do it because of the extremely high price of rent there. So, that's reducing mobility and exacerbating these regional differences and also directly increasing the wealth of people who own homes who are, of course, already on the wealthier side. Geloso: Yes, in a static term, correcting for price differences across region. So if you were to take a picture of the economy right now and you make a picture of inequality based only on nominal incomes across the country---just using U.S. dollars---you'll get a higher level than if you correct for regional price differences. However, it's quite likely that if you were to make a movie of how inequality evolved, the housing restrictions---and this is a comment that's outside our paper and it's just something I think it's worth commenting on---if you make it so that it's impossible to move from low-income Mississippi to high-income California, you're going to make sure that inequality stays high and probably increases. If, let's say, there's a shock to international trade and Mississippi area tended to be manufacturing and people can't move from manufacturing to higher productivity jobs in San Francisco. So in dynamic terms, housing restrictions by preventing mobility prevent a strong equalizing source of income. So in static terms you get the level wrong, but in a dynamic term you're preventing the powerful force of mobility across the country---and this is something I like to point out---if you look for example, you bring someone from Italy to Canada in 1890, his income increased 300% as soon as he got to Canada. He was much richer the minute he set foot in Canada. You probably increased inequality in Canada---I don't know about if you decrease it or increase it in Italy---but when you move that guy away, you probably reduce global inequality. So by moving people to where the incomes are higher you level off inequality. In the United States it's the same narrative, you prevent this equalizing force from working through housing restrictions and making adjustments for---this is beyond the scope of our own research---but making adjustments for the increasing restrictiveness of housing that prevents mobility, you will probably get a large part of increasing inequality in the United States or even in England, which is also a situation like that, and in France, is not the result of terrible market forces responding to terrible government policies. Petersen: My guest today has been Vincent Geloso. Vincent thanks for being part of Economics Detective Radio. Geloso: It was a pleasure.  

Brad DeLong visits Startup Geometry today to talk about economic currents and current economics. He may or may not have confessed to being a hyperintelligent swarm of bees in human form, a historian in disguise as an economist, and/or a Keynesian. He reviews the effects and effectiveness of US economic policies including the 2009 Recovery Act; the Trans-Pacific Partnership; tax, education, infrastructure and other proposals. We discuss the entertainment revolution and the fall of middle class security, and what to do if someone has a bigger yacht than you. If you enjoy the show & would like to hear more episodes, please download, rate and subscribe through iTunes, as your enthusiasm for the show means a lot. Please comment below if you have suggestions for future episodes. Note: I have to apologize for referring to Lois McMaster Bujold a "very competent writer" in the podcast. I tend toward understatement when in interview mode. She's a tremendous writer, and I read everything she publishes greedily, as soon as it comes out. I facepalm myself regularly. Show Notes [0.00.36] Brad DeLong is a hyperintelligent swarm of bees in human form, John Scalzi, Lois McMaster Bujold, gender politics in SF,  Science fiction and economics as worldbuilding exercise. [0.05.48] How economists are made. Jay Forrester's  world dynamics model, education with Roger Wood, Gregg Erickson, Andrei Schleifer, Larry Summers, being an assistant professor applicant in economics vs. history. [0.09.25] Trends in the economic profession, economics considered as the Nile delta. Ulrika Malmendier , Stefano DellaVigna, and Raj Chetty as leading researchers at the behavioral, individual scale. Thomas Piketty and Emmanuel Saez at the macro, sociological scale. [0.13.58] Keeping in mind the lessons of the Great Depression. George Osborne and the perpetual budget surplus idea. [0.16.00] Why is Ricardian Equivalence not a thing? Why should the government invest? What's the benefit to putting off our bills? [0.21.19] What about tax cuts as stimulus? [0.23.23] Why transfer payments, tax credits, infrastructure spending, are better than cutting taxes on the rich from either an efficiency and equity standpoint. The effectiveness and politics of the 2009 Recovery Act. Christina Romer, Barack Obama. $600B in stimulus, where we needed $4T. A fire engine intervenes. [0.29.54] Prospects for improving the situation now. Impact of the social safety net on JK Rowling & entrepreneurs. "You get very few tightrope walkers without a powerful safety net." [0.32.40] Hillary Clinton's agenda. Zero debt grads, infrastructure broadly defined. [0.38.20]Costs and benefits, 20th c. vs. 21st c. Losing the secure middle class existence, gaining better entertainment and communication. Who's rich, and what does that mean psychologically? George Romney vs. Mitt Romney. Jann Wenner vs. Paul Allen. Spalding Gray on the Hamptons. The Buddha: "Desire is infinite." [0.43.00] The end of the fundamental problems (fire, flood, famine, marauding Huns & water buffalo) as we climb the Maslow hierarchy. Noah Smith. The entertainment revolution. [0.47.30] The trade deals. How the TPP could be improved, and what its flaws are. How to negotiate a trade agreement that's better in its distributional effects. [0.55.45] One policy recommendation & one personal recommendation for the listeners. Obama's most costly mistake. The R statistical package. Controlling your infinite desires. Read more from and about Brad DeLong at the Equitablog at the Center for Equitable Growth, or at his blog, DeLong's Grasping Reality, and is readily Google-able.    

Pour écouter cette chronique diffusée sur AligreFM, le 13/03/2012Le retour des inégalitésEmmanuel Saez, un économiste spécialiste des revenus, qui produit, en compagnie de Thomas Piketty et de quelques autres une très utile base de données internationale sur les revenus des plus riches vient de publier des chiffres qui montrent que les écarts entre les plus riches, les 1% de plus riches, et le reste de la population se creuse de nouveau aux Etats-Unis. Après avoir légèrement diminué en 2008, 2009 au cœur de la crise. Pour ce qui est de la France, nous n’avons pas encore de chiffres qui permettent de dire si on observe le même phénomène, mais il est vrai que les inégalités y sont moins bien moins importantes qu’outre-Atlantique.Si je parle, cependant ce matin de ce sujet qui a, on s’en souvient, nourri tout le mouvement des indignés, c’est que l’on peut s’interroger sur le rôle des inégalités, notamment dans la première puissance économique mondiale, sur la crise. Ont-elles contribué à cette crise ? l’ont-elles accéléré et approfondi ?La question fait aujourd’hui débat chez les économistes. Certains assurent que  c’est bien le cas, d’autres sont plus sceptiques. Reste que les écarts se creusent de nouveau, ce qui veut - dire :-        - que rien n’a été fait pour réduire les inégalités,-       - et que si ces inégalités ont effectivement joué un rôle dans le déclenchement de la crise, alors peut se reproduire.Des gains de productivité accaparés par les plus richesQue rien n’ait été fait pour réduire les inégalités, on le sait puisqu’il faudrait si on le voulait vraiment utiliser l’arme fiscale, ce qui n’a pas été fait aux Etats-Unis, l’utiliser pour donner des recettes à l’Etat mais aussi pour modifier profondément le partage des richesses au sein des entreprises.La montée des inégalités a, en effet, correspondu aux Etats-Unis à deux mouvements parallèles : la baisse des impôts qui a favorisé les plus riches et des gains massifs de productivité liés, pour une part à la révolution informatique et, pour l’autre, à la restructuration des grandes entreprises qui, confrontées à la concurrence asiatique, japonaise et chinoise, se sont recentrées sur leur métier de base. Ces gains de productivité ont contribué à faire exploser les profits des entreprises, des profits qui n’ont pas été partagés entre les différentes parties prenantes mais confisqués par les actionnaires et, surtout, les dirigeants. Traditionnellement, lorsqu’il y a des gains de productivité dans une entreprise ou un secteur, tout le monde en profite, actionnaires, dirigeants, salariés. Là, les salariés n’ont rien vu venir. Bien loin de profiter de ces gains de productivité, ils ont vu leurs revenus stagner, voire lorsqu’ils perdaient leur emploi, diminuer. La première cause de cette confiscation des gains de productivité par les dirigeants est à chercher du coté des facilités que leur offre la politique fiscale depuis une trentaine d’années. Lorsque le fisc vous confisque l’essentiel de vos revenus au delà d’un certain seuil, vous n’avez pas intérêt à gagner plus, cela ne sert à rien. Et vous allez donc chercher d’autres satisfactions, vous allez demander à l’entreprise de vous offrir des services, des bureaux aux murs tapissés de tableaux de maitres pour ne prendre que quelques exemples au hasard. Et du coup, ces sommes que vous ne vous appropriez pas peuvent être redistribuées aux autres salariés. Et comme vos revenus ne sont plus directement liés au cours de la bourse, vous pouvez arbitrer en faveur des investissements plutôt qu’en faveur des dividendes.Lorsqu’à l’inverse, on réduit les taux d’imposition, comme ont fait massivement les gouvernements américains depuis Reagan, vous avez intérêt, si vous êtes au sommet de la pyramide à demander et obtenir les augmentations les plus fortes et tant pis si cela se fait aux dépens de vos collaborateurs et de l’avenir de l’entreprise. De fait, vos revenus gonflent, alors même que ceux de vos salariés stagnent. La politique fiscale initiée par le gouvernement Reagan a favorisé le développement de la cupidité des dirigeants, une cupidité que les chercheurs commencent aujourd’hui à mesurer. (voir Paul K. Piff, Higher social class predicts increased unethical behavior)L’expansion du crédit pour compenser la stagnation des salairesLa mondée des inégalités aux Etats-Unis est donc le fruit de deux phénomènes : l’explosion des revenus des plus riches et la stagnation de ceux des salariés qui ont conservé leur emploi (ou la baisse pour ceux qui l’ont perdu, se sont retrouvés au chômage et ont du accepter des emplois moins bien rémunérés). Les deux vont de pair : la stagnation des revenus des salariés a augmenté les profits dont ont profité les actionnaires mais aussi les dirigeants dont les revenus sont indexés, au travers de divers mécanismes, sur les cours boursiers. Et l’on a là, un premier moteur de cette crise : le développement de l’endettement privé. Dès lors que les revenus des salariés n’augmentent plus, voire diminuent, l’économie ne peut se développer que si l’on trouve le moyen de les aider à financer leur consommation, l’achat de voiture, d’électro-ménager, d’immobilier. La stagnation des revenus des classes moyennes a été, aux Etats-Unis, masquée, compensée par le développement de l’endettement. On a prêté de plus en plus facilement. Y compris à des gens qui n’étaient pas solvables. Comme l’explique Rajuan Rajan, la réponse politique à la montée des inégalités a été l’expansion du crédit qui a permis aux travailleurs de continuer de consommer (Fault Lines). Jusqu’à ce que la machine explose lorsque trop d’emprunts ont été consentis à des ménages non solvables.Et lorsque cette crise de la dette privée a menacé, les institutions financières, les pouvoirs publics sont intervenus, transformant une crise de la dette privée en crise de la dette publique.La montée des inégalités a contribué à gonfler la sphère financièreLa montée des inégalités a, par ailleurs, contribué à gonfler la sphère financière. Les plus fortunés se sont retrouvés à la tête de sommes considérables qu’ils n’ont pas consommées, il y a des limites à leur capacité de dépenser pour leur usage privé, mais qu’ils ont investies dans des produits financiers, des produits qu’ils pouvaient se permettre de choisir risqués tant ils étaient riches. Et, de fait, on a vu se développer les comportements que l’on pourrait qualifier d’audacieux. L’aversion au risque des plus riches, pour parler comme les économistes, a diminué. Dit autrement, leur appétit pour le risque a progressé, un appétit que deux chercheurs de la banque d’Angleterre, Prasanna Gai and Nicholas Vause, ont tenté de mesurer. Et leurs calculs ont montré que cet appétit pour le risque s’est développé de manière continue tout au long des années 2000 alors même qu’il s’était réduit dans la deuxième partie des années 90. (Measuring Investor’s Risk Appetite)Cette réduction de l’aversion au risque a tenu à tenu à trois grands motifs :-      -  d’abord, et je l’indiquais à l’instant, au fait que l’on prend plus facilement des risques lorsque l’on est très riche,-      - mais aussi parce que cette accumulation de richesses chez quelques uns a favorisé la montée des cours de la bourse, réduisant ainsi le sentiment de risque. Un peu comme un acheteur de biens immobiliers acceptera de payer très cher un appartement dans Paris parce qu’il sait que depuis des années les prix montent et qu’il est convaincu qu’il en sera encore longtemps ainsi,-       - mais encore parce que le monde financier a inventé toute une série de produits conçus pour réduire le risque pris par chacun.Le recul de cette aversion au risque a un aspect positif : il favorise le développement de nouvelles activités, de start-up dont les risques d’échec sont importants. Si les fondateurs de Google n’avaient pas trouvé sur leur chemin des business angels capables de financer leurs premiers pas, ils n’auraient jamais pu créer leur entreprise.Mais il y a à cela un revers : le gaspillage de ressources. Pour quelques entreprises qui ont bien réussi combien d’échecs prévisibles ? et lorsque l’argent ne va pas dans les start-up, qu’il reste investi dans des titres boursiers, il contribue tout simplement à créer des bulles spéculatives qui font très mal lorsqu’elles explosent.Les inégalités sont donc doublement dangereuses : elles favorisent l’endettement des ménages au delà du raisonnable et donnent du combustible à la spéculation.  La montée en puissance chaotique du monde de la financeJe le disais en commençant, tous les économistes ne sont pas d’accord avec ces analyses ; beaucoup doutent du lien entre inégalités et crise. Ils font valoir, à juste titre, que les inégalités n’ont pas, historiquement, nourri les crises. C’est vrai, mais ce qu’il y a de nouveau, cette fois-ci, c’est l’articulation entre inégalités et industrie financière. Ce qui distingue cette phase des précédentes est la présence d’une industrie financière puissante qui a pleinement profité de cette montée des inégalités à laquelle elle a vivement contribué tant en inventant de nouveaux produits, qu’en donnant l’exemple en versants aux plus brillants de ses salariés des rémunérations extravagantes qui ont tiré vers le haut toutes celles des dirigeants des autres secteurs.Elle a été le chaudron où les inégalités ont d’abord été masquées avant de se transformer en bombes pour l’ensemble de l’économie. Bombes à multiples ressorts. Nous en avons vu les premiers effets avec l’explosion de la dette privée et sa transformation en dette publique, mais nous sommes loin d’avoir épuisé toutes les conséquences de la montée en puissance désordonnée, brouillonne, chaotique de cette industrie. Mais entrons dans ce chaudron. On a tendance, lorsque l’on parle de la finance de jeter le bébé avec l’eau du bain. A l’inverse de ce que l’on dit trop souvent, la finance est utile, j’irais même jusqu’à dire que la spéculation l’est lorsqu’elle étale les risques et donne aux plus audacieux la possibilité de réduire l’inquiétude des plus timides, mais ce que nous venons de vivre est d’une nature différente. C’est un phénomène que nous avons déjà vécu à plusieurs reprises dans l’histoire et que l’on peut résumer d’un mot : la dissonance organisationnelle. Je m’explique : nous avons assisté dans les années 90 et 2000 à la multiplication des innovations dans le monde de la finance. Innovations produites par des équipes d’ingénieurs, de mathématiciens de haut vol qui ont inventé des produits permettant, je le disais tout à l’heure, d’étaler le risque, de continuer de prêter à des gens auxquels on n’aurait pas prêté il y a quelques années. En ce sens, ils ont permis à la machine économique de continuer de tourner. C’est ce que l’on attendait d’eux, et ils l’ont plutôt bien fait. Mais les  banques qui employaient ces ingénieurs, ces petits génies de la finance, étaient, sont dirigées par des gens d’une autre génération, formés à d’autres techniques qui ne comprenaient pas les nouveautés qu’on leur proposait, qui se sont révélés incapables de les contrôler. Et lorsque la machine a trop chauffé, ils ne l’ont pas vu, ils ne l’ont pas compris. Ils auraient pu encadrer ces innovations, prévoir des freins et des amortisseurs. Ils l’ont laissé chauffer jusqu’à l’explosion par ignorance, incompétence. Nous en avons eu en France un bel exemple avec l’affaire Kerviel. La direction de la Société Générale a laissé faire parce qu’elle ne comprenait, en réalité, pas grand chose aux modèles et techniques utilisées dans ses salles de trading. Et c’est la même chose qui s’est produite ailleurs. Qui s’est produite d’autant plus facilement que pour attirer tous ces  petits génies de la finance, les banquiers leur ont consenti des ponts d’or, ont conçu des systèmes de rémunération qui les incitaient à aller toujours plus loin sans garde-fou, sans protection. Le monde de la finance a inventé les outils permettant à une économie de consommation, une économie de petits propriétaires de continuer de se développer malgré la montée des inégalités, mais il s’est révélé incapable de les maîtriser, de les contrôler, de les gérer. Et comme rien ne suggère qu’il ait pris la mesure de ses faiblesses, une nouvelle montée des inégalités est inquiétante.