Thomas Piketty has written a book on Economics that currently sits on the NYT’s Best Seller at the #1 spot. He has admitted that he has “worked with” some very influential folks who have power of the U.S. economic planning.
This wouldn’t seem too horribly bad, until you find out that his reasoning for wanting to tax top earners at 80% isn’t to raise revenue, but to instead dissuade people from wanting to become top earners.
Mr. Piketty urges an 80% tax rate on incomes starting at “$500,000 or $1 million.” This is not to raise money for education or to increase unemployment benefits. Quite the contrary, he does not expect such a tax to bring in much revenue, because its purpose is simply “to put an end to such incomes.” It will also be necessary to impose a 50%-60% tax rate on incomes as low as $200,000 to develop “the meager US social state.” There must be an annual wealth tax as high as 10% on the largest fortunes and a one-time assessment as high as 20% on much lower levels of existing wealth. He breezily assures us that none of this would reduce economic growth, productivity, entrepreneurship or innovation.
He fails Economics 101 on two points here:
First, you cannot make people not want to earn more than their neighbor. It is simply that it is completely against human nature to want to be equal. Even those who preach “equality” do not want to be equal to everyone else.
Secondly, any removal of personal wealth, from ANY of the levels, from the highest to the lowest, absolutely has an negative effect on “economic growth, productivity, entrepreneurship or innovation.” There is no evidence to the contrary at any time in known history. To believe otherwise is to be playing with your own set of facts, which is one of the points that Clive Crook at the link makes mention of.
If a student spouted off any of Mr. Piketty’s ideas and ignored the basic foundational laws of Economics as Mr. Piketty has, they would have received failing grades and never made it to their Associates Degree. Apparently, they do things differently in Europe. Must be some sort of Affirmative Action for idiots program they have going.
Mr. Piketty has done with the “evidence” in his book the exact same thing the Glowball Warmenistas have done with science in the IPCC reports.
The main reason Krugman praises the book isn’t because it fits his world view. It is because he finally found someone who is a better economic statistical liar than he is.