The Haves and the Have Nots

A RE-CAP AND A NIGHT CAP

Tuesday was the last event before we take a break for the summer and reconvene in September. There were familiar faces, and many new faces. The room was overflowing. And the very first question, Is Democracy at odds with Capitalism?, set the tone for the evening’s heated debate.

Mention inequality, as we have learned, and the dialogue really knows no limits. Everything is up for discussion. Every political idea or social reality is implicated. There will be preachers who speak to choirs, revolutionaries who speak in gros mots, angry exchanges that raise voices and sometimes an argument, and reactionaries who state their disagreement and walk out of the discussion in a huff. And there will be vigoruous applause or boos depending on the statement, further testimony to the visceral, heartfelt nature of the subject.

It was therefore an invigorating and enjoyable evening, helped by our guest, Professor Philip Golub of AUP, who layed out the case against neo-liberal economics and its controlling grip on our political system, a kind of grip that has had tragic consequences, inequality high among the list. He described what he saw as the contempt of the rich. The state, he said, has to play a determining role in bringing back more equality and social fair play.

A woman in the audience also gave voice to Thomas Piketty, the author of the now seminal tome Capital in the 21st Century whom she met personally and quoted as saying, “Capitalism went wrong. We allowed it to expand without limitation.”

Progressive Taxation in a Progressively Taxing Discussion

With perhaps two exceptions there appeared to be global acceptance among our audience for Piketty’s position on taxing those at the top of the wealth pyramid to help balance income distribution. In his book Piketty discusses at length a number of progressive tax plans that target income and capital inequality.

We, however (thankfully?), did not get bogged down in the details of tax code changes. We focused instead on the politics and apparent amorality of neo-liberal economics. Here’s a sampling of some comments: “There is no viability in capitalism to solve social problems, given market distortions”, “Government spending has a positive effect on economy”, “The working class has become so underemployed and divided, they no longer speak in a single voice, and this fracture has undermined their political power.”

“Inequality requires income redistribution!” was the resounding sentiment. But how? And to what effect? One businessman voiced concern  that raising taxes impacts businesses negatively – and he was referring to individual not corporate taxes. Not only, he said, does personal taxation reduce the money (and therefore the necessary driving engine) that businesses and investors use to run the economy, it also forces businesses to spend a lot of wasted time on the cumbersome and non profit-making minutiae of the tax code. Business stimulates the economy, he stated, so best leave it unfettered. Finally, for his parting shot, and before being quieted by a growing murmur, he noted that while there is indeed inequality, it is thanks to our capitalistic, wealth-accumulating economic innovations over the last few hundred years that “people are no longer living in mud huts.”

Some people shot back that trickle down theory does not work, inequality is out of whack, and the rich have more and more political power, while the voice of the poor is barely heard at all. It is incomprehensible and unconscionable that “99% of the American population is enslaved by the top 1%”. And don’t forget that “socialism actually exists in America, but only for corporations (for example, bail outs, tax credits, etc..).”

Another disagreement ensued when one member shouted what sounded like fire in a theatre, suggesting that the wealthy do not need to pay more taxes in order to give back to the community because they already provide for the social good via their investments. Several comments were heard in the resulting frey, such as, “Rich people invest, but the state is better at it”, “The health care system is being exploited by entrepreneurs”, “The middle class drives the economy, not the top 1%. For example, look at Ford’s mass automobile production, which was based on middle class consumption and not spending by the rich.” In his defense, our ostensible neo-liberal stated: “Ford was the richest man in America, so his investments and innovations were a social good in that he is a perfect example of how the rich help improve people’s lives.”

“Rich people are creating a moral climate that is ethically wrong.”

A general concern was the concentration of wealth. Can this be sustained? Politically? Economically? Ecologically? On the political side, Prof. Golub said disenfranchisement and social suffering lead to fascism and neo naziism. So, no, such concentration cannot be sustained. All the more so, as one member pointed out, given that population has risen from 2 billion to 7 billion in less than 100 years.

Some people then put our consumption habits into question, asking, Why are we talking about growth all of the time?  We need to “wind down growth” because of resource scarcity. America is a country that over consumes. But so is China, a voice added. You’ve had yours, China often says to the West, now we want ours.

We were reminded then of the The Four Horsemen of the Apocalypse, their misery somewhat tailored to our discussion: Global Warming, Resource Depletion, Population Explosion, and Inequality.

It was suggested that perhaps we need a different model, a model of behaviour that is more green, more respectful of the world’s resources. No fossil fuels, for example. Some claimed that America can lead the way. Others claimed that China is already out in front thanks to its growing use of alternative fuels. Finally, a voice stated that any such change to consumption behaviour will require first an underlying change to our culture, and the personal desires therein. But whether a societal will comes more easily than a political will remains to be seen.

Some reading

Three Books were suggested by our audience:

This Time Is Different: Eight Centuries of Financial Folly,
by Carmen M. Reinhart & Kenneth S. Rogoff

The Great Transformation,
by Carl Polanyi

American Psycho,
by Brett Easton Ellis.

Finally, it is never too late to pick up Piketty’s Capital in the Twenty-First Century. This best-seller is not only an enjoyable and easy read for non-economists, it is the clearest and most thorough exposition on economic inequality out there. Piketty has done something rare in economics: he has made an argument that has won overwhelming support from economists from all sides of the political spectrum, even if his proposed solution (progressive taxation) does not come with the same support.

Someone asked Why has Piketty’s book become so famous? One response was that there is a growing consciousness about inequality. This growing movement, exemplified by Occupation Wall Street, has embraced Piketty’s forceful exposition. As for progressive economists, they will surely make use of Piketty’s research to help them speak about on inequality. “His book will be an impetus for change”, one member of the audience said, but then quickly added, “hopefully”.

– Peter