19 May 2014

Shocking Quotes from Piketty

Capital & Interest, Shameless Self-Promotion 45 Comments

You know how some of you have been saying, “What the heck Murphy, why do you keep talking about this Piketty book? So what if it was #1 on Amazon, and all the progressives are giddy about it? He just wants to raise tax rates right?”

Uh, no. Check out my latest Mises Canada post. You need to realize what is in this book. It’s not simply that he has a bad theory of interest or ignores supply-side effects on estate tax bases (as Martin Feldstein points out, correctly). Here I’ll give you just three examples, but click the link for more:

“Taxation is not a technical matter. It is preeminently a political and philosophical issue, perhaps the most important of all political issues. Without taxes, society has no common destiny, and collective action is impossible.” (p. 493)

“When a government taxes a certain level of income or inheritance at a rate of 70 or 80 percent, the primary goal is obviously not to raise additional revenue (because these very high brackets never yield much). It is rather to put an end to such incomes and large estates, which lawmakers have for one reason or another come to regard as socially unacceptable and economically unproductive…” (p. 505)

“From the standpoint of the general interest, it is normally preferable to tax the wealthy rather than borrow from them.” (p. 540)

45 Responses to “Shocking Quotes from Piketty”

  1. K.P. says:

    At least he’s making it clear that he has an ideological bias.

  2. Alexander N. Andreassen says:

    God, he reminds me of the socialists Bastiat argued against in “The Law”.

  3. Stefan says:

    ‘Shocking’ seems looks like a weasel word here. So the guy believes that wealth and income concentration at the very high end has polticital and economic effects that aren’t worth it. Debatable, but calling it ‘shocking’ just suggests you are cloistered or inarticulate. Lets advance the discussion…

    • Bob Murphy says:

      OK Stefan what if someone said he doesn’t think people with red hair should be allowed to keep both kidneys. Would that be shocking or just a matter of discussing the sociological and medicinal effects of kidney distribution?

      You don’t think it’s shocking that someone wants to deliberately wipe out high incomes and wealth, and not for any other purpose than to deliberately wipe them out?

    • Major-Freedom says:


      Why do you demand that Murphy advance the discussion when Piketty just wants more guns and more force?

    • guest says:

      This …:

      When a government taxes a certain level of income or inheritance at a rate of 70 or 80 percent, the primary goal is obviously not to raise additional revenue … It is rather to put an end to such incomes and large estates …

      … reminds me of this:

      [First video, at 03:35, Anthony Weiner speaking]:

      Testy, Combative Anthony Weiner Simply Cannot Shake Steely Cool of Fox’s Megyn Kelly

      This deal would basically say that for people who inherit money, that money gets taxed at a lower rate than if they worked 70 hours to earn it. That’s just not fair.

    • guest says:

      So the guy believes that wealth and income concentration at the very high end has polticital and economic effects that aren’t worth it.

      Worth it to whom?

      If to “the public”, that’s irrelevant. The reason the wealth was even created in the first place was to satisfy specific individuals’ (that is, “paying individuals'”) preferences in return for the satisfaction of the specific seller’s preferences.

      “The public” can’t desire anything, anyway. Only individuals can do that.

      The political effects of great wealth are only a problem because collectivists have created the incentive for such things in their belief that the economy should be regulated.

      Without regulatory agencies, there would be zero political effects.

      The economic effects of great wealth don’t harm anyone unless the wealth was stolen, or was only capable of being acquired through political favors (see above).

      Wealth inequality isn’t UNfair – it is PRECISELY fair (again, barring theft or political advantages).

      It is fair because the way the economy works is that specific consumers voluntarily choose specific sellers from which to buy.

      So, it is the consumers which necessitate competition; And competition necessitates wealth inequality.

      In other words, you’re not supposed to get what you want if you don’t provide what the seller wants.

      Wealth inequality is normal and GOOD; Good because the values for final goods that are set by consumers provide information (in the form of prices) from which others can determine their own path to prosperity.

      If you distort that information with regulations and money-printing, you’re going to make others (the rich and the poor) poorer to the benefit of the politically connected.

      That for which you advocate – wealth equality – requires the cronyism you think you’re fighting.

  4. khodge says:

    I find myself in agreement with the first: Taxation is philosophical and political issue. My conclusion, however, is very different from the rest of the quotes: it is the poor who are not taxed, who, therefore, do not share a common destiny and collective action with those of us who are taxed (at least on the Federal level), who share in the common goods without sharing in their costs.

  5. cswaters says:

    Kinda off-topic… Has piketty given his opinion on the current french economy in any of the recent articles/interviews about him? I couldn’t find any.

  6. John says:

    Other than the the third point, about which people differ very strongly, isn’t he essentially right about the other two points? Whether and how much to tax is fundamentally a question of the kind of country/society you want. And without taxes certain kinds of collectivist action aren’t really possible as a practical matter. My understanding is those philosophically opposed to taxes, as a general matter, disfavor those kinds of actions.

    Obviously, a high estate tax is there to put an end to huge inheritances.

    Are you saying that these statements reveal Piketty’s political philosophy, because I think that’s probably right.

    • Ben B says:

      Taxation is also a technical issue; taxes aren’t neutral. Taxation will also have effects on “society” that many central planners will find undesirable.

      When you say that without taxation certain types of collective action aren’t possible what you are really saying is that you don’t believe that you can convince enough people to adopt your plans of action without compelling them with violence. I don’t see how you can know this a priori. Perhaps, they will accept John’s plan voluntarily.

    • guest says:

      And without taxes certain kinds of collectivist action aren’t really possible as a practical matter.

      The problem with collectivist action is that as soon as you, as an individual, disfavor the action, you are, by definition, no longer part of “the collective” – thereby rendering the action tyrannical.

      When someone says “collective”, you should think to yourself: “collective of what?” The answer is “collective of individuals”.

      This is why individual rights always trump so-called collective rights.

  7. Enopoletus Harding says:

    I find the first ludicrous, the second correct, and the third correct as well.

  8. Bob Murphy says:

    For those of you who think the first quote is no big whoop, did you see this part?

    “Without taxes, society has no common destiny…”

    • Andrew_FL says:

      Yeah it’s like, everybody will make their own plans and there is just no way to coordinate those plans at all.

      It’s like he’s never hear the word “prices” before.

    • guest says:

      … did you see this part?

      He’s a communist.

    • Ken P says:

      You truncated it, Bob. “Without taxes, society has no common destiny, and collective action is impossible.

      To me it is obvious that the free market is intrinsically collective action. A lot like honey bees building their hive. I realize that many are too bias to recognize that fact, but the number of examples of non-tax related collective action is incredible and the functionality of the outcomes is through the roof. Wikipedia… and even Google are great examples. Phone apps are an especially good example because even Apple didn’t expect them to amount to much.

      If the problem truly is too much power in the hands of the elite, then why is the answer to increase the power of the political elite?

    • khodge says:

      Well, of course, if you have a successful business, you didn’t build that. What could be more clear than that?

  9. Major-Freedom says:

    1. Even with taxation, there is neither a common destiny nor collective action. There would still be, or more accurately there is right now, individual destinies and individual action. This ancient mythos of the “purity” or “perfection” of the collective, or, if you will, the ideal of humanity’s re-absorption into the divine singularity after being exiled by creation into temporality, mortality, finitude, and alienation, that constantly comes out of the Platonic/Leftist/Socialist clique of society cannot be accomplished by violence. If any sort of demigod like reabsorption into the One should ever take place, it would do so at an unfathomably distant future, and it won’t take place because A points a weapon at B and says your wealth or your life. That’s like believing the mysteries of the atom can be penetrated by children kicking sand at each other in the sandbox. Their grand visions of society are nothing more than mental doodles..

    2. What Piketty believes is “socially unacceptable” is really nothing more than him arrogating his own resentment, jealousy, and ideological preferences to the status of objective law. Huh, that’s something I’ve never ever read or heard from before throughout history, and it’s definitely something that I have never ever suspected would lead to any conflicts or bloodshed. Of course, a wage or income ceiling backed by force is not something Piketty will personally carry out. No, he can’t sully his hands with such dirty work. Better to just make a poem out of it.

    3. No such thing as general interest. To each their own, but not everyone is contented with just their own.

  10. Transformer says:

    “From the standpoint of the general interest, it is normally preferable to tax the wealthy rather than borrow from them.

    Well, at least he’s not in favor of burdening future generations.

    • Bob Murphy says:

      Transformer wrote:

      Well, at least he’s not in favor of burdening future generations.

      Heh, good one Transformer, but actually you’re exactly right: Piketty understands that it burdens society to pass on a large government debt. It’s telling (to me) that Krugman didn’t mention any of that in his gushing praise for Piketty. (At least, I haven’t seen it.)

      I would be tempted to say, “For Krugman, destroying people who are a tad higher on the income distribution than he is, is more important than rooting out error in discussion of government debt,” but that would give him too much credit. I doubt Krugman has read much of the book.

      • Transformer says:

        I’ve been very struck by the numbers of favorable reviewers who have concluded “The central economics arguments of this book are seriously flawed – but I like its policy proposals , so its a work of genius”.

        Its like the minimum wage debate but without even monopsony to provide any support.

      • Tel says:

        Class war is not about taking from the haves and giving to the have nots. It is about taking from the haves and giving to the politically well connected. I’m sure that those with good records of service to the cause will be suitably more equal than others, in the new world of equality… and all very fair it is too.

  11. Cosmo Kramer says:

    I can handle a lot of opposite economics, but Piketty is just too much for me.

  12. Cosmo Kramer says:

    I’ve wondered, where is Jorg Guido Hulsmann on Piketty?

  13. Andrew' says:

    When he says “general interest” he is using the word “general” incorrectly.

  14. Benjamin Cole says:

    Piketty does have one point—even during WW II, the fate of the world in the balance, the feds borrowed money from the wealthy rather than tax it away.

  15. Cody S says:

    This might be off topic; I keep coming back to the same question.

    Piketty admits high income tax rates are not revenue mechanisms, at least in the practical sense.

    All these people who think that it is the duty of society to confiscate excess wealth – are they just stupid?

    Any half-baked dunce can see that you can confiscate 95% of net income for a billionaire, and never get anywhere near his “real money”: you’re just skimming his interest.

    It seems the most likely conclusion, given all the doctorates and people hurling the word ‘genius’ around like a squash ball, is that these guys aren’t just stupid: they are being intentionally dishonest.

    To say it bluntly, if Krugman and Piketty hate money sitting in vaults so much, why don’t they call for the taxation of money sitting in vaults, as opposed to taxing individuals’ real value to the economy?

    Sorry if that’s too left field.

    • Bob Murphy says:

      Cody S he wants to seize their wealth too. In some places (I haven’t put in the quotes I don’t think) he toys with outright wealth taxes of up to 10% per year for the richest people.

      • Cody S says:

        Thanks, I see. Well, at least that’s consistent with the other things he is saying.

        Running the numbers in an excel file a while back, I think I worked out 6-7% wealth tax on the wealthiest one percent of Americans was an approximate replacement level for all current income taxes.

        It would be cool not to have to pay taxes.

        Less cool to have to beat palm fronds into toilet paper, and eat lunches off the bottoms of rocks.

        Oh, well; life’s all about trade-offs. Grubs taste way better when you don’t have to think about how much happier rich people are.

        I wonder how long it would take all the billionaires to move out of the US.

  16. Bob Roddis says:

    More evidence that the alienated college crowd that used to be Marxist is now Keynesian following the popular demise of Marxism by Pol Pot. If and when Keynesianism suffers a similar demise, something else will arise to take its place.

  17. W. Peden says:

    “Without taxes, society has no common destiny, and collective action is impossible”

    An amazing line from someone supposedly possessed of a tendency towards “exhaustive historical rigour”.

    The overwhelming majority of human existence preceded the development of taxation, and it was not a period of isolated individual cavemen. That’s quite apart from all the collective actions that don’t involve the state.

    ‘Statism’ is an overused term, but it applies in the most basic sense here: a philosophical esteeming of state power.

    • Bob Murphy says:

      Yes W. Peden! I was thinking the exact same thing. Gene Callahan sometimes complains that an-caps use “statist” as a synonym for “non-anarchists,” but this guy Piketty really is a statist.

      • Philippe says:

        “The overwhelming majority of human existence preceded the development of taxation”

        Do you mean prior to roughly 3500 BC ?

        • Major_Freedom says:

          There was no taxation in US territory until the European settlors arrived (and paid taxes to the Kings in Europe).

    • Matt M (Dude Where's My Freedom)) says:

      “The overwhelming majority of human existence preceded the development of taxation”

      Eh, I’m not so entirely certain that’s true. I mean, the taxing schemes might not have been quite as elaborate. The taxes might not have been directed at money incomes (as most people didn’t have money incomes). But the notion that “the people in charge can come along and take your stuff in order to satisfy their own needs/desires that may or may not reflect the needs/desire of the collective” is pretty old. As old as the Bible, at least.

      Presumably, tribes of cavemen had a system where the Chief could club you over the head and drag your wife off to their own cave for a night of romance, but I don’t have a citation for that. Does that count as taxation? I guess it’s a point of semantics, really…

    • Bob Roddis says:

      It seems to me that “collective action” is only possible if everyone is a volunteer. The only reason to pull out the guns and SWAT teams is because there aren’t enough volunteers to perform the “collective action”. What the statists really mean by “collective action” is a large project that everyone is forced to join.

      • Philippe says:

        “It seems to me that “collective action” is only possible if everyone is a volunteer”

        Not really possible though. For example, if you were to set up some sort of Rothbardian society on a rig in the Pacific ocean, your children born on that rig would be members of that society by default. They would be obliged to follow the rules you set out for them, or else they could potentially try to change them in some way.

        The question is, when you set up your Rothbardian society, did you give your children a way to change the rules in a peaceful manner, or would they have to resort to violence?

        • K.P. says:

          Not possible? Maybe not. But you’ve jumped from “everyone is a volunteer” (Say, Gen 0) to “what about their offspring?” (Gen 1)

          Can people not act collectively before they start reproducing?

          • Philippe says:

            “Can people not act collectively before they start reproducing?”

            can you identify a cohort of humans that existed before human reproduction started?

            • K.P. says:

              Does two qualify as a cohort?

              • Philippe says:


  18. Bob Roddis says:

    I submit that Piketty knows nothing about ………….. much of anything.

    PIKETTY: You know, the concluding thought of my story is that.technological rationality does not lead to a democratic rationality. So the market and private property should be the slave of democracy rather than the opposite. So we want to use the market system, the price system, the property system so as to make sure that everybody will benefit from prosperity, will benefit from income and wealth.But for this to happen we need very strong democratic institutions, very strong fiscal institutions, a very strong and inclusive education system. You know that’s not going to happen just by relying on technological forces and market forces. So we really, the lessons of history are very important for that. For a long time, the agenda was set by a number of people arguing that all we need is market competition. Or the book by Milton Friedman in the 1960s argued that all that we need basically is a good Federal Reserve, we don’t need a welfare state, we don’t need progressive taxation, with a good Federal Reserve that’s enough. I think to a large extent, we still live in this legacy today. We still believe that since 2008 basically that creative monetary policy and a good action by central banks is going to be enough. That’s not going to be enough. We need a good central bank. We need a good Federal Reserve but that’s not enough. We also need progressive taxation, we also need a welfare state, we need education. We need new forms of progressive taxation. I think we’ve been asking too much to creative monetary policy in the past five years. You know that’s not going to solve all of our problems. And sometimes it is creating bubbles. It is creating huge profits for certain people and a huge loss for others. You know taxation is more complicated than money creation because you need the Parliament to vote for the tax base. You need to enforce the tax law. That’s more complicated but at least we know who pays what. Whereas when you create billions of dollars or billions of euros everyday sometimes you do not know what you are doing with them. We need to rethink these institutions and what they have brought us in the past and what we need for the future in a new light.


    • guest says:

      We also need progressive taxation, we also need a welfare state, we need education. We need new forms of progressive taxation.

      At least with the Progressives being so forward and open, now, they can’t be said to be consistent if when they attack America’s Founders for being just as forward:

      The Federalist No. 46

      But ambitious encroachments of the federal government, on the authority of the State governments, would not excite the opposition of a single State, or of a few States only. They would be signals of general alarm. Every government would espouse the common cause. A correspondence would be opened. Plans of resistance would be concerted. One spirit would animate and conduct the whole. The same combinations, in short, would result from an apprehension of the federal, as was produced by the dread of a foreign, yoke; and unless the projected innovations should be voluntarily renounced, the same appeal to a trial of force would be made in the one case as was made in the other.

      By all means, let’s threaten each other as consistency demands of True Believers; But this complaining about “extremism” (which word you were instructed to “always say”, anyway, by the Caucus, if you are Representative Chuck Schumer) is an appeal to a retarded intellect.

      (A retarded intellect which was deliberately developed, I might add.)

      If you’re a True Believer in Socialism, such appeals are beneath you.

  19. guest says:

    consultingbyrpm blog tag piketty

Leave a Reply