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Thursday, April 17, 2014


During the five days that I was writing my review of Piketty, I was very much buried in the minutiae of the book, struggling to render it for my readers in a fashion that was comprehensible.  Since that time, I have taken a holiday in Africa that included two very lengthy plane trips.  This has given me some time to step back from the rich detail of Piketty's account and think more generally about the significance of his discoveries.  In this post, I begin a discussion that I hope will provoke some of you to thoughtful reactions.

To my way of thinking, there are two large facts that stand out from Piketty's exposition.  The first is that the bottom half of the population in modern capitalist societies has a net worth of zero.  The second is that the historically very high concentration of inherited wealth in the hands of the richest 1% or 0.1% or even 0.01% of the population, a concentration that diminished markedly between the two world wars and the boom years of the post-war period [les trente glorieuses], has now been reestablished and threatens to become even more markedly unequal in the remainder of the twenty-first century.

How on earth can half of the population of a country like America own nothing?  Don't they have stuff?  Clothing, dishes, TV sets, cell phones, cars?  Good grief, don't many of them own their own homes?  Of course they do, but they also owe a great deal.  They have mortgages;  They have unpaid credit card balances; they have student loans; they owe on their cars.  And of course, many in the bottom half do not even have mortgaged homes or indentured cars or student loan debts.  They live from paycheck to paycheck, barely making ends meet.  Collectively, on balance, subtracting their debts from their assets, they own nothing.  We are not talking about a relative handful of the very poor.  We are talking about one hundred sixty-five million Americans.

Piketty gives us the figures but does not spend much time at all talking about the significance of this astonishing fact.  In the richest nations on earth, nations whose collective wealth dwarfs that of the grandest kings, emperors, and oligarchs of the past, half of the people are worth nothing at all [measuring worth, as is appropriate in a capitalist society, by net asset value, not by  intangible spiritual or moral possessions of the soul.  These one hundred sixty-five million men, women, and children no doubt have many very fine qualities, but the market value of those admirable traits is zilch.]

The asset-less fifty percent may not own anything, but they work, and their work is essential to the lives of the asset-rich.  Later this morning, I will walk across the street to the local Harris-Teeter supermarket to buy some things for dinner.  The supermarket is stocked with fruits, vegetables, meats, fish, and an endless variety of canned foods.  All of that food was grown, processed, packed, shipped, laid out in the store, and will be sold to me by members of the asset-less fifty percent.  If they do not do their jobs, if they do not soldier on, assetless as they may be, then I starve, unless I can somehow manage to hunt and gather in Chapel Hill in the fashion of my ancestors.  All of us in the asset-rich upper half depend on the work of the assetless to survive.

To be sure, I and my fellow upper fifty-percenters offer invaluable goods and services to the assetless in return.  It may be that without them, I could not eat.  But without me, they could not understand Immanuel Kant.  One might wonder:  in a post-Apocalyptic America of the sort so beloved by film makers, would one rather come upon someone who knew how to grow corn or someone who could explicate the Critique of Pure Reason?  Judging from the reward structure of American society, it would seem that the consensus gentium finds for the Kant scholar.  I was paid, during my long career, vastly more than those who grew my food, made my clothes, built my home, delivered my mail, or even gave me flu shots and performed MRI's on me as needed.

Income inequality is not so lopsidedly severe as wealth inequality, of course.   Those in the bottom half must have some income, for they must eat and wear clothes and live somewhere or they will not be able to look after the needs of the asset-rich.  But as Piketty and many others have noted, even income inequality is getting worse at an astonishing rate.

The concentration of wealth at the very top of American society [and French, German, Italian, Japanese, and Chinese society, of course] is truly hard to grasp.  The richest 1% of America is some 3,300,000 men, women, and children.  They own roughly 30% of all the wealth in the country.  But half of all American wealth is in the form of housing, and in the portfolios of the rich, housing does not loom large, even though they may own McMansions.  It is no exaggeration to say that the rich own most of what there is that is not nailed down.

In thinking about this extraordinary inequality in the distribution of wealth, it is very important to distinguish between capital and capitalists.  Does society need capital?  Of course it does.  Capital is simply the accumulated and unconsumed product of previous cycles of production.  Capital is buildings, it is tools, it is raw materials for production, and it is intellectual property -- patents, copyrights, etc.  Life at anything beyond a scavenging subsistence requires capital.  If a farmer did not set aside part of her crop as seed corn, she would be unable to plant the next year's crop.  [At just this point in my writing of this series of reflections, I followed a link to Paul Krugman's review of Piketty for the New York Review of Books and read what he has to say.  I strongly recommend it.  It is an intelligent and very generous review, and is worth reading.  To continue.]  Piketty estimates annual depreciation globally at 10% [rather higher than I would have guessed], so simply replacing what wears out requires setting aside a substantial proportion of each year's annual product, and that quantity of output set aside is capital.  Economic growth, of course, requires even more to be set aside and accumulated as capital.

But although society definitely needs capital, does it also need capitalists?  Does it require that there be an identifiable [small] subset of the population that owns the social capital?  Picketty never asks this question, and despite his European left-wing political self-identification, it seems not to be a question he wishes to raise.  He seems to view this question as having been settled by the disaster that was the Soviet Union, much as militant anti-Catholics consider the Inquisition to have settled for all time the merits of Christianity.  [Side note:  Serious atheists like me do not make the mistake of blaming Jesus for those who acted in His name.  I wish serious religionists would accord Karl Marx the same courtesy.]

There are, I think, three arguments justifying the existence of capitalists.  The first is what we might call the Max Weber or Protestant Ethic argument:  to initiate the explosive economic growth characteristic of the earliest stages of capitalism one needed individuals who were driven essentially by religious motives to engage in endless, obsessive accumulation and re-investment.  These individuals became very rich very fast, along the way expanding the productive capacity of society in ways that benefited everyone and gave us the modern world in which we live.

The second argument is what we may call the Steve Jobs or Creative Genius argument.  The endless expansion of modern economies is driven by creative geniuses whose brilliance, imagination, and unrelenting industry yield new products [the electric light, the automobile, the computer, the cell phone] or new modes of production [the assembly line] without which the world as we know it now would not exist.  These individuals convert their ingenious inventions into the ownership of huge enterprises worth unimaginable amounts of money, along the way providing all of us with the fruits of their creativity.

The third argument is what we may call the Marginal Product or Competitive Advantage argument.  Modern economies are organized into vast productive assemblages of labor and capital that require skillful management by individuals who possess scarce and immensely valuable abilities.  Competition for their indispensable services results in astronomical salaries which they earn by guiding the companies they lead to hitherto unachievable heights of productivity and profitability.  Inevitably, these individuals over time accumulate huge stores of wealth, which wealth they then make available to the world as capital by investing it rather than consuming it.

[I omit a fourth argument, due to free market fundamentalist libertarians of the Ayn Rand stripe, who claim that the rich have acquired what they own by legally free and uncoerced exchanges in a sunlit market, and hence have an absolute and unchallengeable right to everything they own.  Bob Nozick to the contrary notwithstanding, this is a dopey argument, and not worth discussing.]

I am happy to concede the first argument, since it is purely historical, and offers no justification for the continued private ownership of the means of production [a.k.a. capital].  The second argument I am also willing to concede.  Far be it from me to take a single penny from the late Steve Jobs, from Bill Gates, or even from the egregious Mark Zuckerberg.  I happily grant that they deserve every dollar they have.  However, there is no reason that their children or other heirs should share in this wealth.  They did not create it.  So far as I can see, capitalism would function quite efficiently with a 100% inheritance tax after an initial exclusion -- say half a million dollars, or less -- to allow parents to pass something on to their children.

The third argument, as Piketty indicates, and as many have argued, is simply nonsense.  There are no theoretical or empirical grounds for supposing that highly paid "supermanagers," as Piketty calls them, are paid an amount equal to their marginal product.  I am happy to grant that the managers of large enterprises should receive substantial salaries.  If we were to return to the sorts of salaries that were common fifty years ago, when capitalism was doing quite nicely, that would be a great victory indeed.  And of course it goes without saying that these well-compensated executives ought not to be allowed to pass on to their children whatever portion of their large salaries they fail to spend during their lifetimes.

What would be done with the enormous accumulations of capital taxed away on the death of those who had accumulated it?  One natural response is that the income generated by it could be used to improve the level of compensation of that propertyless bottom fifty percent.  And who would own this capital, once it had been taxed away from the estates of the original accumulators?  The obvious answer is, society would own it.  Which is to say, each generation would pass on its accumulated capital to the social fund of capital.  It would still be managed by well-compensated executives, and there would certainly be a pyramidal distribution of wealth and income, but the pyramid would be dramatically flattened and its base would be raised up.

It seems to me that this is the natural direction in which Piketty's arguments lead, once we give up the unexamined assumption that society requires capitalists in addition to capital.  Would talented and driven individuals choose to innovate, like Jobs, or manage, if they could not pass their gains on to their children?  That is a question of fact, not answerable by mere speculation, but there would be many ways in which to investigate it with interim measures designed to reduce, but not eliminate, the transmission of capital assets to children who had not in any sense earned them.

It will be very interesting to see whether Piketty's book, which is having so big an impact in some economic circles, leads some theorists to raise these questions.

Who knows?  Socialism may not be dead yet.



On his blog, Paul Krugman gives a preview of his forthcoming review of Piketty.  Since I tackled this book as a naif, knowing very little indeed about macroeconomics, I am pleased to see my spontaneous reaction echoed by someone who really does know what he is talking about.

Later today, I shall try to catch up with your comments on my multi-part review, and expand my discussion of the larger lessons of Piketty's book.

Wednesday, April 16, 2014


Just in case there is anyone who is not yet bored stiff with my safari stories, here is a list of the animals and birds we saw.  There were many more species of birds.  I just did not succeed in writing their names down as we bounced along in the Land Rover.

Animals and Birds Seen on Botswana Safari



I:   Animals


Chacma Baboon                                                        Vervet Monkey

South African Ground Squirrel                              Wild Dog

Banded Mongoose                                                     Dwarf Mongoose

Spotted Hyena                                                           Lion

Leopard                                                                     African Elephant

Burchell's Zebra                                                        Common Warthog

Hippopotamus                                                           Cape Buffalo

Bushbuck                                                                   Sable

Red Lechwe                                                               Southern Reedbuck

Blue Wildebeest                                                         Tsessebe

Common Impala                                                       Springbok



II.      Birds


Common Ostrich                                                       Crested Francolin

Blue Quail                                                                  Helmeted Guineafowl

Crested Guineafowl                                                  Egyptian Goose

White-faced Duck                                                     Spur-wing Goose

Bennett's Woodpecker                                              Crested Barbet

Southern Yellow-billed Hornbill                              African Grey Hornbill

Southern Ground Hornbill                                      African Hoopoe

Lilac Breasted Roller                                                Malachite Kingfisher

African Pygmy Kingfisher                                       Woodland Kingfisher

Little Bee-Eater                                                         Blue-cheeked Bee-eater

Southern Carmine Bee-Eater                                  Jacobin Cuckoo

African Cuckoo                                                         Coppery-tailed Coucal

Meyer's Parrot                                                          Grey Go-Away Bird

Spotted Eagle Owl                                                     African Bared Owlet

Rock Dove                                                                 Cape Turtle-Dove

Red-eyed Dove                                                          Wattled Crane

Common Sandpiper                                                  African Jacana

Black-winged Stilt                                                     White-fronted Plover

Long-toed Lapwing                                                  Black-winged Pratincole

African Fish Eagle                                                    White-headed Vulture

Bateleur                                                                      African Marsh-Harrier

Gymnogene [Harrier Hawk]                                    Tawny Eagle

Secretary Bird                                                           Dickinson's Kestrel

Reed Cormorant                                                       Slaty Egret

Little Egret                                                                 Great White Egret

Grey Heron                                                                Goliath Heron

Cattle Egret                                                               Hammerkop

Hadeda Ibis                                                                African Sacred Ibis

Great White Pelican                                                  Yellow-billed Stork

African Openbill                                                       Saddle-billed Stork

Maribou Stork                                                           Fork-tailed Drongo

Magpie Shrike                                                           Brown-throated Martin

Wire-tailed Swallow                                                  Dark-capped Bulbul

Burchell's Starling                                                     Red-billed Oxpecker

Golden Weaver                                                         Blue Waxbill

Pin-tailed Whydah                                                   

Tuesday, April 15, 2014


On several occasions during game drives, we tracked lions or leopards for more than an hour before finally coming upon them.  Here is a curious and very convenient fact:  Lions and leopards have tender paws, which are vulnerable to thistles, stones, twigs, or other objects in the bush that can become embedded in a paw and cause problems, so they prefer to walk on open sandy or dirt patches.  The game camps have either made dirt tracks through the bush by design, or else have gone over certain places so often that they have become worn into tracks.  The lions, leopards, and also hyenas walk along the paths, so their tracks show up quite nicely and can be followed for long stretches, before they go off the paths across country.  The guides can recognise the tracks of a dozen and half different animals, and use the tracks to find them.  It may sound boring to sit in a bouncing Land Rover for an hour or more as it follows the tracks or crashes through small Mopane trees and accacia bushes looking for the tracks to reappaer, but there is a real sense if accomplishment when, after a long time, the guide points under a bush and there, sure enough, are two male lions.

Here, by the way, is a lovely landscape taken with the panorama function of my IPhone.


And here is the mother in a tree.


Here are the mother and daughter lion, before they climbed up in the tree.


While I am struggling with the problem of getting my videos off my cell phone and onto my blog, I thought I would post a few pictures and tell the stories that go with them.  Since, for some bizarre reason, I cannot succeed in  uploading more than one picture in each post, I may do a number of these  To start, here are two wild dogs, members of a pack of eighteen.

There is an interesting story about these dogs.   Wild dogs live and hunt in packs that have a very strict hierarchical structure.  Each pack has an alpha male and alpha female.  When we came on this pack [after some impressive tracking by the guide, following tracks in the sand or dirt], our guide pointed out the alpha pair.  The male had suffered some sort of really horrible injury to its right eye, and the eyeball was protruding from the socket, almost separated from the skull.  His left eye also seemed somewhat dysfunctional.  A subordinate female started harassing the alpha female, and a fight broke out between the two, with the alpha female biting at her to discipline her.  The guide said it looked as though she was trying to mate with the alpha male [and thus displace the alpha female.]  The subordinate female's mate kept trying to stop her from doing this, interposing himself between her and the alpha female, grabbing her ear in his mouth and pulling her away.  She persisted in going after the alpha female, and her mate kept trying to stop her.  There were five cubs in the pack, and they looked seriously undernourished, as though the pack had not been successful in hunting.  Wild dogs hunt by running down their prey, following them until they weary and can be killed.  As we watched the pack from perhaps ten or fifteen feet away, a brief but very vicious fight broke out involving not just the alpha pair and the challenging pair but most of the adult dogs.  After it stopped, we saw that the subordinate female's mate had suffered a fresh wound on the side of his face and was bleeding.

When we set out the next morning on a game drive, the guide reported that another Land River had come upon the pack and found that they had killed an eaten an impala, which is not much food for eighteen dogs, but was at least something.  When we found the pack again, more fights broke out, and we saw that one of the other subordinate males had lost part of an ear overnight, suggesting that the fighting been continuous.  All of the guides were puzzled by what was going on, and our guide said they would have to get together, share their observations, and try to piece together a coherent story.  He thought the pack would splinter, since in its present condition it would find it very difficult to function as a coherent effective hunting force.

This was one of several such on-going "story lines" we observed during our safari.