This is a fantastic book. Highly recommended. What follows is just a home for my notes on the book.
Also, see
Christine Desan, a commentator on money and the institutional structures that support it.
There is a connection with my AI deliberations. "Money" is in the eye of the beholder. Piketty points out that the social structures behind it are also in the eye of the beholder, such as class, property, and borders.
This leads to the observation that many see elements of capitalism, such as inequality, are real and not "subjective." Economic inequality tangibles to actual results. The human "economy" is built on top of a real environment. Money is imaginary until you have none. Wealth is in the eye of the beholder until you look at the physical destruction involved in our economic history (war, depression, climate change).
Since all aspects of the "economy" and the structures of society are subjective, it is not surprising to see wildly different visions of what is going on. "they tend to see things as going pretty well except for certain threats to their status. "Losers" see systemic evil. If articulated, this evil uses the "poor" as machinery to create wealth for the "rich."
Piketty is uniquely humble in many ways. He recognizes his limitations in ways you seldom see in this kind of writing.
"Real" stuff (not fundamentally mental):
- Population - headcount;
- Life expectancy;
- Violence - varieties of murder from official to private;
- Actual inequality, such as access to "stuff";
- Pollution and other forms of "externalities";
- Consumption of real resources, especially energy;
"Mental" stuff - "in the mind of the behavior:
- Law;
- Class;
- Perceived inequality;
- Financial wealth;
- Liberty and restrictions to it;
- Happiness;
It is fair to note that Piketty moves back and forth between these types of "reality." The general thrust is to treat all types of "data" as part of the real world, like mountains and thunderstorms.
Is inequality socially theory. There seems to be evidence that a more egalitarian society is more productive. This is at the heart of the "top-down" economic approach.
Useful to compare all this to studies of the actual lifestyles of the world's population as a whole.
Note that tax breaks for the rich who "deserve it" also benefit those who don't. It's also worth noting that the paradigm examples (such as Bill Gates) owe much to the social structures, such as patent law and education - specifically the education of Bill Gates himself.
Excellent treatment of the emergence of the idea of property during and just before the French Revolution.
A case can be made that inequality before the French Revolution was less than it was in the "Belle Epoch" around 1910. You might say that the enlightenment project failed.
(My guess is that high return on investment prior to 1914 failed to factor in the risks that were exposed by WWI and the Russian revolution, which destroyed vast quantities of wealth).
"Inheritance from father to son should not be taxed since it's just continued enjoyment of the property."
(for some reason, the same logic is not applied to the income of a working father that is spent on food and rent for his family).
"Proprietarianism" - capital sacred right, no need to provide access to info - 18th century. Extend the forms of property without limit. The confrontation is between owners and workers difficult. Not sure about this. The sacred status of a "bond" is strongly related to this concept. Slavery exchanged for the "right" to assume debt. "Quasi-sacralized" property/debt.
When slaves were freed, owners were generally compensated, part of the logic of the sacred status of the property. This is similar to the compensation of landowners in France. Nobody, until recently, has talked about compensating slaves.
Shifting idea of whether or not Christianity condones slavery. Wasn't it slavery that allowed for the "tighter classes" to engage in the arts and sciences? There were arguments that the abolition of slavery would result in a lack of competitiveness.
Slave rebellion and the fear of it played a key part in abolition. These lead to tens of thousands of execution.
Note that other forms of bondage were abolished at the same time slavery was abolished. This contrasts with public debt, which doesn't get forgiven.
There is a parallel logic between emancipation and what happened in Russia (chapter 6). As in Haiti, the idea is that the slave is expected to buy his freedom. This converts slavery into perpetual debt. The slave was worth 4-6 years of wages for a free worker. Proposed to deprive former slaves of property rights.
Replacements were "indentured" servants. In debt for the cost of their transportation - about 10 years. Not "identical" to slavery, but not much different. "Free" to assume debt. "Only revolutions confiscate without compensation."
"Coercive debt strategies"
1-1.5 million Mexicans were deported from California in the dirty thirties. Many were born in the USA.
The tie between the end of slavery (bondage) and the modern dependence - monetization - of debt is notable.
Interesting to note that Lincoln proposed compensation for slaveholders. Everyone probably knew this was not going to happen.
600,000 dead in Civil War.
No compensation for slaveholders or slaves. What about the 40 acres of land and a mule? No law to this effect was ever passed.
In the USA, a slave was worth 10-12 years of free worker's wage. Compensation at public expense was not feasible. In 1860 value of slaves was 2x the annual GDP for the States. That would mean former slaveholders became bondholders. Debt resulting from the war itself was 30% of GDP.
Jefferson and Maddison did the math on compensating slaveholders. Jefferson saw no way to free the sales. He called it like holding a wolf by the ears (1820).
One argument was slaves were better off than the poor in "civilized" countries. Plausible argument.
Deportation of slaves relocated 13,000 - a tiny fraction. They worried about allowing free blacks to stick around. In Liberia, political power was in the hands of the "Americos" until 1980.
Interesting history of the evolution of the 2 party system.
A fascinating account of the debate over war debt coming out of the civil war. Denial of the right to vote connected to both immigrants and blacks. The 14th amendment (right to vote) was never enforced. Similarly, the 15th was left to the States to enforce.
1877 end of reconstruction. Then segregation kicked in, resulting in a huge reduction of black participation in political or economic society. In the end, a gradual migration to the North. Numerically, this was not a big deal.
1884, Dems win the presidency. Birth of Social Nativist / Democratic ideology. Dems jettisoned this and switched to social justice in the 1960s.
-------------- BRAZIL -------------
Fascinating story. Slave revolts. Lots of racial "mixing." The idea that children born to slaves were "free" with strings attached. Abolition in 1888, then the fall of the regime in 1891. Slavery was abolished, but the poor were excluded from voting until the 1980s.
--------------- RUSSIA -------------
Again, the issue of compensation to the "owner" of the serf. Serfs needed to buy their freedom. But the State was weak, with local enforcement and no justice system. No tax system. No way to compensate through public financing.
Experiment with the abolition of slavery is similar to the abolition of serfdom. A civil war in the US, and a revolution in Russia.
=============== Chapter 7: COLONIAL SYSTEMS OF INEQUALITY =======
Colonies developed for the benefit of the colonial power.
NOTE: Piketty's account of how property and debt arose parallels the usual story of how debt-based money replaced money based on species.
In the 19th century, slavery was replaced by modern serfdom and debt - a process that went on well into the 20th century.
The brutal treatment of indigenous people adds to the slavery story.
1520 Mexico 15 - 20 million to less than 2 million in 2 million with lots of interbreeding. 5-10 million to 1/2 million in Canada/US, but not much interbreeding.
2nd colonial era peaked in 1938. 450 million in the British empire.
Generally, he needs to get a head count of the "elite" in many different situations. Nobility in 1700, whites vs. backs in slave societies.
The Colonial system used the administrative structure to dominate the population.
Inequality is constrained by the "subsistence requirement." Useful to compare incomes in multiples of "subsistence" level. Obviously, the richer society is, the higher this multiple can be.
Owning classes can own more than 100% of the wealth by putting the bottom tranche in debt.
Figure 7.6 is key to the underlying math. I have been looking for this. It undermines Reich's analysis.
% of wealth can go nuts in "neo-proprietarian" societies.
Multi-dimensional nature of poverty can't be measured in one number. The world moved from 3x to 30x subsistence. You need to look into the details of lifestyle.
Note the problem of the top guys persuading the bottom guys that the arrangement is just.
Note that competitiveness is still used to justify high profits and low wages.
Balanced budgets in the colonies meant taxes were paid by the poor for benefit of the colonizers. Such as regressive "head task." providing comfortable salaries for the colonizers. Health and education were for the colonizers. There is an echo of this in the modern USA.
All education then and now is elitist. "No country is in a position to give lessons on this subject."
Niggling transfers from the colonizers were to pay for the salaries of the elite and "keep order."
Bottom line, colocalization offered high returns at low cost. Fabulous profits that benefited the elite at home.
We have the suppression of the "poor whites" by the local aristocratic system.
Foreign "investment" was brutal at first, with extraction kinda literal. In the second wave, it was "return on investment" that became the neo-liberal regime in current times. The effect is clear in the case of Greece or other situations where the IMF "saves" countries from debt. Compensation to slaveholders stretches into the 20th century and many others. Opium wars. WWI debts imposed on Germany.
Morrocco great example - conquest leading to "rescue" and heavy debt and debt accounting for 1/2 of Morocco's revenue and so forth.
The "invisible hand" doesn't have much to say about the economy in the mid-1800s. The wealth of nations depended on slavery, compensation to slaveholders, and substantial returns on investment from colonial investments. Accumulation of wealth is not about the "invisible hand." It's about the emerging concept of property and replacing serfdom and slavery with debt.
"Fairy tales" in economic textbooks. Property relationships are always tense and are enforced by law.
Chapter 7 - a side trip on the issue of racism and mixed-race marriages, and women as property.
In South Africa, again, we see a reluctance to redistribute property. Property rights are sacred no matter how violently they were obtained.
============ Chapter 8 - India ===============
The clergy was a prototype for the corporation, which is an organization that has income and wealth distinct from its members. Celibacy requirements specifically supported this.
Anti-Muslim motives were key to the alliance between Europeans and Hindus. A shadow crusade continued into the 19th century. 1492 was when the Moors were kicked out of Spain. There were echoes of this in the Gulf War.
======== Chapter 9 =========
"night watchman" functions need tax income > 1% of GDP ... a weak state
enforcement of property rights requires a "night watchman" function ... more tax revenue
this transforms the State into an ownership State
the arms race between states of Europe lead to strong states
in 1550 moguls and European capacity about equal. By 1780 150,000 to 450,000 plus others
organization and tech plays a role too
Adam Smith's ideas bear little resemblance to 18th-century reality-China more like it.
The amazing history of the Opium wars. Added book on the subject to Kindle.
The military force behind the "modernization" of japan could not be more explicit.
Japan became a colonizer.
"Pre-modern inequality regime" - Japan is an example of a very quick transition to a modern regime.
1856 slavery of "
Roma" abolished
----- China---
Confucianism is a civic theory rather than a religion. Respect for the property is important.
Official influence from the 2nd century to 1911. Part of the state rather than apart from it like the European Papacy. Contributes to the fragmentation of Europe. Communism is also a "State Religion."
In the early 2010's Confucius returned to a place of honor.
China was too weak to be despotic. Never more than 1% tax in the 17th century. 0.02% in civil service and military. Lacked the means to ban opium import. Early Spanish state similar ...
Lack of data caused by the weakness of the State. 1742 attempt to reduce the warrior class. Proprietary micro-societies. Exam system. Right to testify and others. You could actually BUY a certificate in the 19th century; for example, sons of the wealthy could be eligible. Passing the exam correlated with a high-status family. Somewhat similar to the admission system to top schools in USA Today. 1/2 of the posts are reserved for "bannermen" - warriors. Applied to only "federal" posts - 10%. 1911 Empire fell. The purchase of certificates went to general revenue. Tai Ping peasant rebellion 1853, noticed by Karl Marks. European powers took the side of gov't over property rights and debt. Boxer Rebellion - Europeans again backed the regime (10 European powers). 1911 government respected property rights and made redistribution impossible. 1912 Western Govts backed even more right-wing regimes.
IRAN
Related to the trifunctional nature of Islamic governments. Shias follow the Immam. Sunnis follow the Caliphs. Shias, therefore, denounce political leaders popular with the poor. Possible link with Zoroastrian ideas. High priesthood, Shiite clergy, is a class or caste. Echos of the opium wars with tobacco. In 1951, the privileges of the oil companies resulted in the ouster of the elected government. Specific recognition of religious orders in the constitution, Religious authority dominates the "secular" branch. This is unique in history.
His breakdown of Middle East politics is worth the price of the book.
Religious ideals have regularly ended in disillusionment. Religious messages of equality are coupled with rigidity and the general inability to underlie a religion and flexible enough to paradoxical support of things like slavery.
========= GENERAL =========
The modern world is the result of tripartite systems being replaced by proprietarian systems with legal (regalian powers) authorities gathered in the Nation State.
============ CHAPTER 10 ======
Interesting frame from the beginning of WWI to 9//11.
End of colonialism
1914 - 1945 huge transformation
private property vanished in USSR and China
Many ways that private property was challenged
- Progressive tax;
- Expropriation;
- Change of ideology and challenge to the sacred nature of the property and the marketplace
Classic ownership structure has been replaced by "neo-prioritarianism." He has a big issue with unequal access to career paths that leads to astronomical management salaries, especially education. Also, wealth inequality is always greater than income inequality.
"Patrimonial middle class" - the lower class owns nothing. As an aside, what about the value of assets owned by the government and, for that matter, services?
Some comments on the disputes on the left in the time of Marx. It seems that Piketty's analysis of history is bound to be better than Karl Marx or Adam Smith.
Agriculture leads to the concentration of wealth in the form of land.
Note how he manages to get rid of money as a measuring stick. He uses worker earnings, ratios that cancel out money. Good to change your thinking, in addition to questions about fables like GDP.
How did the wars cause such a big drop in private property? Not just the bombing.
We have been persuaded that we participate in history through politics and voting. In fact, we participate through income and debt.
The concept of property changed. Expropriations increased equality in the "debtor" nations and created losses in the bondholder classes in the colonial powers.
*Progressive" systems redistribute income among taxpayers. The truly poor don't pay income tax at all but are subject to other taxes, such as VAT. Redistribution is, therefore, in the form of spending programs. For example, Canadian Medicare and pension program are forms of UBI. Health and pension support have become (except in the USA) the core of fundamental social support.
New Deal: "Bargain Basement Social Democracy."
Note - Canadian public owns the medical system. In the US it is a private asset. This contrasts with attacking the "problem" as a wealth vs. income issue.
"Nationalization" of the US medical system would involve owners' compensation. Probably staggering cost.
Contrast Germany's move to worker participation on boards with the US undermining of unions. This didn't happen by accident. Note that this could only apply to publicly traded companies. Or does any corporation need a board?
All this co-management is a harmonious compromise with Marxian ideas.
Thinking that increasing tax on vast management salaries can be avoided by just increasing the wage, but this effectively increases the tax on corporate tax profits.
Talk about national "competitiveness" in terms of taxes etc. but misses the educational gap.
Very low inter-generational mobility in the USA. This is perhaps a key factor in "injustice." How back does this go? Why do the "poor" fail entrance exams? Are the "Ivy League" universities for-profit capitalist enterprises? 10.1% return on investment in richest endowments.
"Trust fund babies."
Lack of transparency. Effective in raising funds. Comparison with the Ching dynasty practice of buying qualifications.
He struggles to find reasons why central planning doesn't work and why you need just a bit of private property. Attempts to sort out where one kind of ownership is to justified over another.
==== Chapter 13 =====
A useful discussion of "National Income" vs GDP
Or "Net National Income"
Net National Income balances out globally except for tax havens.
Good analysis of climate change
Some note about "intellectual property"
Chat about central banking.
Euro was created with the understanding that the bank's job is limited.
======= Chapter 15 ==========
Account of how the makeup of the vote in the US reversed
- educated people started voting Democratic
- so now Democratic party is the party of the educated - good news bad news
- those who rose the most tended to vode Dem
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