On Piketty, mathematical silliness, inherited wealth and mysterious entities

From the book everyone’s talking about, Thomas Piketty’s Capital in the 21st Century, a review by Paul Krugman in the New York Review of Books:

“Why does inherited wealth play as small a part in today’s public discourse as it does? Piketty suggests that the very size of inherited fortunes in a way makes them invisible: ‘Wealth is so concentrated that a large segment of society is virtually unaware of its existence, so that some people imagine that it belongs to surreal or mysterious entities.’ “

Quite so. And there’s nothing like offshore secrecy jurisdictions to wreath these assets in mystery. And people aren’t just imagining it; these assets genuinely are owned by surreal, mysterious entities, via offshore companies and trusts and their like.

We are currently in the process of reading the book. It has enormous implications for a wide, wide range of tax justice issues, and we’ll be writing plenty more about it. Piketty’s recommendations – more wealth taxation, international co-operation on tax, and more – are core tax justice campaign themes. And we also share his cynicism about the economics profession’s “childish passion for mathematics.”

If you haven’t read the review, take a look – or look at the growing multitude of other reviews that are out there. The book is, as Krugman says:

“a truly superb book. . . a book that will change both the way we think about society and the way we do economics.”

Updated: all this nicely fits with comments in a recent blog by US tax expert Linda Beale, entitled Does Lowering Corporate Tax Rates Create Jobs? Answer is a resounding “no”.

“Folks, it is quite clear that there cannot be a sustainable good-for-all economy if productivity gains constantly drift upwards (redistribution from the many to the few) as they have been in this country for the last two decades while at the same time tax policies “reward” the elite with lower taxes (another form of redistribution from the many to the few).  One has to wonder just how tone-deaf Congress must be, to continue to listen to economists whose policies rest on mathematical silliness and the lobbyists for big corporations and their wealthy shareholders and managers.

It’s a post which is well worth reading. And on the mathematical silliness, a picture to consider.

Copyright 2014 Michael Goodwin. Illustrations by Dan E. Burr.