"Debunking Piketty and the Left's Celebrity Economists"

 Source:

https://mises.org/wire/debunking-piketty-and-lefts-celebrity-economists

"If you were to browse the economics section of the majority of bookstores here in my home city, Dublin, you would find something of an odd phenomenon: these businesses which essentially exist because of free enterprise and voluntary exchange—i.e., because of capitalism—stock very few books by pro-market pro-capitalism economists.

... the most frequently encountered names include Karl Marx, John Maynard Keynes, Paul Krugman, and David McWilliams (the latter being Ireland’s most famous economist—a fellow at the Sanders Institute who believes housing and education should be free).

... I can say with absolute honesty that I have never seen books by F.A. Hayek, Thomas Sowell, James M. Buchanan, Murray N. Rothbard, Walter E. Williams, Ludwig von Mises, or even one of the best-known and least radical, relatively promarket economists, Milton Friedman.

And I have rarely seen them in independent or secondhand bookstores here, too.

... One reason might be because in the West today, the dominant culture in major institutions, mainstream media, and corporations is centered around leftism, and the bookstore owners themselves are merely responding to consumer demand;

if criticism of capitalism ... is in vogue—and it is—more people may be likely to read anti-capitalist books and authors.

One of the economists on the left whose works regularly reside in these bookstores is, of course, one of the most popular and bestselling living economists—Thomas Piketty/

... Chronicles (is) a collection of his writings since the 2008 financial crisis.

... Here are some of the problems with Piketty and his book.

... the French economist who has been referred to as “the modern Marx.”

In the preface of Chronicles, Piketty opines that “in the long run, patrimonial capitalism is the only kind that can exist.”

... It essentially means that throughout history the economic elite attain their fortunes through inheritance, not through innovation or entrepreneurship.

This claim does not stand up under the least bit of scrutiny.

For example, 327 of the people on the 1987 Forbes 400 (a list of the richest Americans) had dropped off the list by 2014.

The remaining 73 were mostly self-made entrepreneurs and investors.

Also, Steve Kaplan of Chicago Booth and Joshua Ruah of Stanford found that 32 percent of the Forbes 400 in 2011 came from very rich families, down from 60 percent in 1982.

... a large number of billionaires in recent years came from poverty ...

... many of the essays ... criticize the supposed lack of sufficient taxation of the superrich and corporations.

Piketty regularly calls for countries to increase their corporate tax rate.

... Bosnia and Herzegovina has a lower corporate tax rate (9 percent) than the very wealthy Ireland (12.5 percent).

The low rate has attracted some of the biggest companies on the planet, creating an abundance of jobs and economic growth.

Bosnia and Herzegovina is one of the poorest nations in Europe.

Of course, these are two very different countries, with the former having recently suffered through years of war.

So, let us compare two prosperous European nations: Italy’s corporate tax rate stands at 28 percent (including municipal taxes), while Switzerland’s is 16.5 percent, yet Switzerland was recently ranked second in the world for quality of life, while Italy was fifteenth.

Outside of Europe, Venezuela is blessed with an abundance of natural resources and has one of the world’s highest corporate tax rates (34 percent), yet it is the poorest country in South America based on GDP.

Singapore—relatively resource poor—has a corporate tax rate of 17 percent and its personal income tax rates are some of the lowest on the planet, yet it has regularly taken the top spot for quality of living in Asia.

A nation’s corporate tax rate, and indeed tax rates in general, are only one of the factors in how that nation functions and prospers—or doesn’t.

... Piketty recommendS enforcing an “entirely European corporate tax rate” with a “minimum rate of 25% in each country,” but he has also gone on record as saying that under his tax plan, billionaires would be taxed out of existence.

In an interview with the Economic Times, Piketty stated that one of the core differences between his work and that of Marx is that Piketty believes in private property and markets, because “these are also a condition of our personal freedom.”

For someone seemingly concerned with personal freedom, Piketty appears to have no issue with centralized EU command dictating to sovereign nations what their corporate tax rate should be.

Nor does he seem to see any conflict between personal freedom and even greater European centralization.

In Chronicles, he writes, “[T]he number one priority is to create a European authority capable of fighting the markets on equal terms.

If that means submitting national budget bills to the European institutions, starting with the European Parliament, well then, let’s go ahead.”

For Piketty, European federalism is “The Only Solution,” -- the transformation of the European Union from an informal union of sovereign states into a single federal state with a central government is what the economist desires.

If Mr. Piketty were genuinely concerned about personal freedom, one would hope that he would prefer to see a decentralization of power and more control at the local level, rather than even more power for EU bureaucrats ...

... To be fair, Piketty has said that “inequality is not a problem per se.”

It is his opinion that extreme inequality is the problem.

Thus, his target for fixing the ills of nations is, seemingly, always the wealthy and corporations.

But who decides what constitutes “wealthy”’?

We could argue that the entire Western world is wealthy compared to the poorest countries on the planet.

Should we increase taxes on every Western citizen and redirect money to these countries in a bid to reduce clearly extreme inequality?

... And what of the role of government when it comes to the “wealth gap”?

Could it be that government policies like overregulation and high taxes on lower and middle earners are often counterproductive, burdensome, and serve special interests?

... Despite all of this, Piketty has been and still is one of the most popular economists in the West.

Go to any bookstore here in Ireland, at least, and you will see his titles on display, replete with quotes of glowing praise.

Keynesian economist Paul Krugman has been one of those to gush with acclamation, despite many of Piketty’s claims being debunked or disproved ...

Of course, Piketty shares this “popularity” trait with many other hugely influential and regularly praised economists of the Left, like Keynes, Krugman and, of course, Marx.

But perhaps the admiration for these economists makes sense: they talk about things like poverty, inequality, peace, and injustice—issues people care about.

After all, what has economic freedom and voluntary exchange—capitalism—ever done for all of that?"