Michael Hudson je ekonomist, ki že leta opozarja na problem neenakosti in nezasluženega rentištva v ekonomiji in v družbi. V intervjuju za Renegade Economist razpravlja o tem, kje vidi pomanjkljivosti Pikettyjevega dela. Močno se strinja, da je knjiga pomembna, saj je na široko odprla vrata razpravi o neenakosti, vendar, poudarja, je statistika, ki jo je uporabil Piketty, pomanjkljiva. Razlog je po njegovem mnenju v tem, da uradna statistika v določenih državah ne zajema davka na kapitalske dobičke, saj nekatere države tega davka sploh nimajo. Poleg tega se bogati (in korporacije) v splošnem skušajo izogibati plačilu davkov.
Piketty prav tako ne omenja povezave med naraščajočimi dobički in dolgom (vzvodi), predvsem v zadnjih tridesetih letih finančne deregulacije. In končno, v veliko primerih so premožni do bogastva prišli z izsiljevanjem, podkupovanjem in nasiljem. Posledica vsega omenjega je v tem, da je dejanska neenakost še veliko večja kot jo prikazuje knjiga.
Karl: Sweeping the world have been glowing reviews of the new book by Thomas Piketty, Capital in the 21st Century. I’ve been pounding on the bookshop doors asking when it’s arriving, this 700-page opus. It hasn’t hit here yet but I’ve read many book reviews. Have you had a chance to grab a hold of this must-read document?
Michael Hudson: No, but I have worked on the statistics that he uses for the last 50 years, so I know the problems with the statistics and what they can do and what they can’t do. And I’ve read what he’s been publishing all along with his colleague in California,
Emanuel Saez, about the concentration of wealth and income at the top of the pyramid.
Karl: And that’s the big point is that he’s renowned, along with Saez, for working on income inequality, but this book really looks at wealth inequality.
Michael: The problem with Piketty’s statistics is that it vastly understates how unequal the world really is and that’s because – you may know in Australia that our Queen of Mean, the hotel lady Leona Helmsley said “Only the little people pay taxes”. What she means is only the little people earn income. Rich people in America don’t earn income, they make capital gains and capital gains are not in everybody’s income statistics, they’re not in the statistics basically that are reported. And the IRS, the Internal Revenue Service of the United States, only conducts a study of capital gains once every ten years or so, and countries like England and many European countries don’t even have a tax on capital gains, so they’re not going to appear in the statistics.
So one of important results of Piketty’s work, if you know what you’re reading, is that the disparity in wealth is much greater than the disparity of income, and that’s because of tax avoidance by the rich. They don’t earn an income. And the same is true of corporations. The largest American corporations I think in the world are Google and Apple. Apple takes all of its income in Ireland, not in the United States, so how are you going to treat all of this? That’s the element that’s left out of this, that rich people don’t earn an income.
The other thing that is left out of the income tax statistics is of course how fortunes are really made, and that’s crime and fraud. The good thing about Piketty is he points out, why is it that French novelists and English novelists tell you much more about wealth than economics? And he points out that in the 19th century novels by Jane Austen and Balzac, the way to make a fortune is to marry into it. That’s true, but what Balzac also said is that behind every fortune is a great theft.
Now, let’s look at Forbes’ list of the richest people in Russia, China, the Ukraine or the post-Soviet economies. I can guarantee you that they didn’t make this wealth by saving up income, they didn’t earn a higher income; they stole the property by fraud and internal bribery, the same way that the great fortunes were made in the United States. The History of Really Great American Fortunes by Gustavus Myers shows how the railroad land grants made fortunes by bribing congressmen and by privatising the land. The great fortunes are made by privatising natural resources, land and the public domain, and since 1980, when the concentration of wealth and income have really taken off, as Piketty shows, this is the age of privatisation, of Margaret Thatcher, of Ronald Reagan, and Boris Yeltsin in Russia.
Karl: But that’s been the interesting point is even with these limited statistics, he’s had to delve into the tax records to try and find this incredible wealth that’s come through privatisation, that’s come through this rent-seeking. That even with all those limitations you’ve pointed out, he has still come up with some incredibly strong statistics that people like Paul Krugman are just floored by. And it seems like it’s slapped the economics profession in the face to say look, we’ve got to get beyond income inequality and really focus on this wealth issue and have a look at how this wealth is created and what we can do to redirect economics, to look at the distributive side of the equation.
Michael: You’re right. He’s started the discussion by showing the fact of vast inequality. What needs to be done now is to explain how did this inequality come about and what do you do about it? And as you and I have talked on this show before, the solution of simply taxing fortunes, which is very hard to do, is a very broad hammer. And you and I have spoken about particular kinds of wealth and particular kinds of making fortunes are predatory, and that’s namely economic rent, whether it’s land rent, natural resource rent, monopoly rent or the kind of money that the financial sector makes. So Piketty’s book, large as it is, didn’t discuss this except at the end to say “Well, you need to somehow tax the wealth away”. Well, that’s true, but that’s for another book in the future. How do you tax it away? What’s the best kind of tax to make economies grow?
One of the things that Piketty does not discuss when it comes to making fortunes is the role of debt, that most of these fortunes that have taken off since 1980 have taken off because of the increased debt leverage. As interest rates have fallen since 1980, you’ve had more and more bank credit going in to just bid up real estate prices, stock prices, bond prices, every kind of price, not to mention fine arts trophies that have gone with this. So, just as you’ve had the rising ratio of wealth to income of the 1%, you also have a rising ratio of debt to income. And so this indebtedness and the net worth again is very unequally distributed. Most peoples’ families, the major asset they have is in their home but these homes are also very heavily mortgaged and the mortgage payments they make, basically the 99% makes interest payments to the 1%.