Thomas Piketty and The Iron Law of Wages

Like-minded thinkers: Thomas Robert Malthus (13 February 1766 — 29 December 1834), English cleric, scholar, and economist; and Thomas Piketty (7 May 1971 — ), French economist

Like-minded thinkers: Thomas Robert Malthus (13 February 1766 — 29 December 1834), English cleric, scholar, and economist; and Thomas Piketty (7 May 1971 — ), French economist
Photo Credits: Wikimedia Commons / John Linnell (1792-1882), and Wikimedia Commons / Gobierno de Chile

Discussing blogging recently  with a couple of high school interns brought to mind the French economist Thomas Piketty, and how much his ideas on income inequality have been seized upon by the political Left to justify further state intervention into the economy. Inevitably, the conversation also brought thoughts of the eighteenth century economist whose thinking Piketty is, consciously or unconsciously, emulating: Thomas Malthus and his Iron Law of Wages.

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Lessons From The Developing World

An Indian plowman in West Bengal working in India's largest industry: Agriculture

An Indian plowman in West Bengal working in India’s largest industry: Agriculture
Wikimedia Commons / ILRI

In my last two posts,  I have taken looks at the history of leftist revolutions and of Europe to glean lessons about what works and does not work in economies. In this essay I will try to explore what the underdeveloped and developing economies of the world have to teach us.

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More Historical Lessons From Europe

GDP per capita in Europe in 2014

GDP per capita in Europe in 2014. According to the World Bank, the U.S. GDP per capita in the same year was $54,540.
Wikimedia Commons

In this post, I will continue my look at what history can tell us about economics and politics. In my last essay, I briefly examined what lessons the major leftist revolutions — the French Revolution and the communist revolutions of Russia and China — could give us. In this post I will investigate how the economic and political history of post-French Revolution Europe might cast a light on the current American progressive-neoliberal conversation.

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Historical Lessons on Economics and Politics

Revolutionary Images: Lessons to be avoided like the plague!

Revolutionary Images: Lessons to be avoided like the plague!
Left: A barricade erected by revolutionaries in Moscow, 1905. Wikimedia Commons / Imperial War Museum
Right: People’s Liberation Army entering Beijing, 1949. Socialist Worker

How to further the conversation between progressives and neoliberals? That was the the question I left with you at the end of my last post. The fact we desperately need such a conversation is underlined by the almost hysterical reaction of the American Left to the election of Donald Trump. From their reaction, one would think Trump is one of the Four Horsemen of the Apocalypse. Either that or he is merely a Russian agent.

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Is Putin Secure?

The headquarters for the Russian Federal Security Service (FSB) at Lubyanka Square in Moscow in the same building that used to be the HQ of the KGB.
Wikimedia Commons/NVO

There is some doubt about whether Vladimir Putin will remain President of the Russian Federation, effectively Russia’s dictator, for much longer. In a post on The American Interest website entitled The Siloviki Coup in Russia,  Ms. Karina Orlova informs us a very slow moving coup is proceeding in Russia. It is being conducted by the Federal Security Service of the Russian Federation, often referred to by the Latin alphabet initials of its Russian name as the FSB. (using the Cyrillic alphabet the initials are ФСБ. Remember that when you are looking at photos of Russian police in action. If they are wearing flack jackets with that on the back, you know they are FSB, the main successors of the old KGB.

Russian FSB officers at the Domodedovo airport

Russian FSB officers at the Domodedovo airport blast caused by suicide bombers linked to the al-Qaeda-linked Caucasus Emirate.
Wikimedia Commons/RIA Novosti archive/Andrey Stenin / Андрей Стенин

Orlova calls this slow coup the Siloviki coup ( silovik, siloviki plural, is the Russian word for a government official) because high ranking Russian officials are being taken out of their positions, sometimes by forced retirements and sometimes by accusations of criminal acts and imprisonments.      Continue Reading…

Russia’s Weaknesses

Constant Russian per capita GDP in 2010 US dollars (blue curve) and its percent change from a year earlier (red curve).

Constant Russian per capita GDP in 2010 US dollars (Blue curve) and its percent change from a year earlier (red curve).
Image Credit: St. Louis Federal Reserve District Bank/FRED
Data courtesy of the World Bank

Russia is in deep economic trouble. Just how much trouble and what it portends is a matter of heated and extensive controversy.  Continue Reading…

Russia: A Classic Fascist Power

Moscow Kremlin, the working residence of the President of Russia

The Moscow Kremlin, the working residence of the President of Russia.
Wikimedia Commons/Минеева Ю. (Julmin) (retouched by Surendil)

Will Adolph Hitler and Benito Mussolini have the last laugh on history? There seems to be an almost universal rush among almost all the nations on Earth to become more like their prototypical fascist regimes. And no current nation on Earth is more like those 1930s fascist powers than the Russian Federation.    Continue Reading…

The Fermenting of the West’s Discontents: Crisis of Ideology

The three witches in Shakespeare's Macbeth

Double, double toil and trouble;
Fire burn, and cauldron bubble.

The three witches in Shakespeare’s Macbeth, Act 4, scene 1
Image Credit: Wikimedia Commons/Johann Heinrich Füssli 1783

The Western World’s political and economic elites, standing in for Macbeth’s witches, have certainly been fermenting Western discontent in their magic cauldrons. All over Europe and North America, electorates are seething with anger, frustration, and fear. Could this be the end of … what? It is hard to see exactly how the Western World will change its many world-views, but change them we must if we are to continue existing. If reality is actually different from our views of it, it has a tendency to remind us of the difference in generally unpleasant ways.

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The Socialism of the Scandinavian Countries

Scandinavian countries of Denmark, Norway, and Sweden

The Scandinavian Countries of Denmark, Norway, and Sweden
Image Credit: Wikitravel/Stefan Ertmann

In the previous post Are European States More Socialist Than The US?, I noted that American progressives had a particular love affair with the Scandinavian states because they were supposedly more socialist than the United States. For example Bernie Sanders said last October during a Democratic Party debate“I think we should look to countries like Denmark, like Sweden and Norway, and learn from what they have accomplished for their working people.” In this essay I intend to narrow my focus to these Scandinavian countries to see how much they should be considered socialist paragons.

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Are European States More Socialist Than The US?

Lamartine, before the Hotel de Ville, Paris rejects the red flag of revolution and socialism on Feb. 25, 1848. By Henri Félix Emmanuel Philippoteaux , Public Domain

Alphonse de Lamartine rejecting the red flag of socialism in front of the Town Hall of Paris during the 1848 French Revolution.
Wikimedia Commons/ Henri Félix Emmanuel Philippoteaux (1815-1884)

The American Left has a romance with European nations, particularly with Scandinavia, because of their supposed more socialist mix between the polar-opposite, platonic ideals of Socialism and Capitalism. Bernie Sanders, for example, believes we should sit at the feet of the Scandinavians and learn from their example. Last October during a Democratic Party debate, he said “I think we should look to countries like Denmark, like Sweden and Norway, and learn from what they have accomplished for their working people.” A conservative rejoinder that it just ain’t so can take two routes. One is based on history, and one on economic data from the European countries. For the moment, I will take the data route, and discuss the history later in a following post.

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Are Leftist Economies Better Than Free-Markets?

Country Per Capita GDP vs. the WSJ/Heritage Foundation Index of Economic Freedom for 178 countries.

Country per capita GDP vs. WSJ/Heritage Foundation Index of Economic Freedom for 195 nations
Data courtesy of Wall Street Journal/Heritage Foundation and the World Bank

In a comment to the post   Comparing the Economies of All Countries on Earth, a reader noted:

One thing that you don’t talk about is that several of the highest ranking “economic freedom” countries are places where progressives have had freer rein to experiment with social democracy, or perhaps even democratic socialism, such as Canada, Estonia, Denmark, and the UK. I don’t see why you frame the discussion as progressive bad vs. conservative good when there are countries with “progressive” economics that rank as highly in economic freedom as the US.

I explained why I thought American progressives were very bad, indeed, in my last post, Are You Unconvinced Democrats Are Growing More Authoritarian? In this essay I will question the commenter’s presumption that “several of the highest ranking ‘economic freedom’ countries are places where progressives have had freer rein to experiment with social democracy, or perhaps even democratic socialism, such as Canada, Estonia, Denmark, and the UK.” The implicit question begging to be asked has an answer I believe to be very different from what is often assumed. The question is: Does the United States have an economy that is much more of a free-market than can be found in Canada, Estonia, Denmark, the U.K., and other European nations? I claim the answer, depending on the compared country, is quite often shockingly no!       Continue Reading…

Comparing the Economies of All Countries on Earth

World Map of per capita GDP in 2014

World Map of countries by per capita GDP in 2014
Image Credit: St. Louis Federal Reserve District Bank/FRED

Plus or minus a few controversial states (like Taiwan, the Holy See, and Palastine), there are around 195 countries in the world today. Each one possesses an economy that is at least slightly and sometimes greatly different from every other country on Earth. Each one is a different experiment in economic organization. What can we learn from them about what makes economies run well?      Continue Reading…

Crony Capitalism

World Map of Transparency Internationals perception of corruption index for 2015

World Map of Transparency International’s perception of corruption index for 2015
Wikimedia Commons/Turnless

If there is one area of agreement between believers in capitalist free-markets and American Leftists, it is that crony capitalism is an unmitigated evil. What is meant by “crony capitalism” by most people is a collusion between private business people and government officials. In this partnership a business person provides the government official monetary and electoral support. In return the government official provides the business person with regulatory relief and tax breaks, or other state economic intervention not available to most other businesses. Some motivations for politicians to engage in crony capitalism other than monetary gain and electoral support are to promote economic growth, increase employment, or to influence prices. Nevertheless, even if a politician is motivated by such an altruistic goal as promoting economic growth, his actions are overwhelmingly likely to be counterproductive.     Continue Reading…

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