Piketty vs. Summers on Capital and Labor
See WSJ comments on next page below, followed by the book review by Larry Summers. Summers' review is outstanding and worth the time to read every line of it. Although a democrat and a liberal, Summers' is also a scientist and speaks the truth as he understands it. It is no wonder he did not last long with Obama or Harvard.
NOTE: I like Summers, he is sane; Krugman, on the other hand is insane; and hardly every close to being right. of course, if he is right, then it is a pity, because not many are listening to him, particularly the White House. Joe
Summers awards Piketty the Nobel Prize. [for the data collection in his book: Captial.....]
Piketty argues [as i do] that machines can smoothly replace labor; Summers disagrees. Have no idea where Summers head is on this issue. If any doubt, read any of the ten books by Ray Kurzweil. Just look around. qualitivity is gaining over quantitivity. [In technical terms: the elasticity of substitution between capital and labor is substantially greater than 1; and if so, then it makes no sense to increase the minimum wage.] This is a great argument I had not heard before.
Summers goes on to say: "there can now be no doubt that the phenomenon of inequality is not dominantly about the inadequacy of the skills of lagging workers." This means there is a fundamental flaw in Capitalism.
Summers' says: Thomas Piketty’s Capital in the Twenty-First Century ; as with Paul Kennedy’s The Rise and Fall of the Great Powers, which came out at the end of the Reagan Administration, hit a nerve by arguing the case against imperial overreach through an extensive examination of European history. Piketty’s treatment of inequality tapped into the zeigist and is perfectly matched to its moment. Summers goes on to say, when the Berlin Wall collapsed, so did Kennedy's Rise and Fall. Will Piketty stand the test of scrutiny. The Financial Times found a number of significant errors in Piketty's spread sheets, including strange formulae and seemingly conjured up numbers.
Summers lauds the work by Piketty but seemingly disagrees with much of it. One should read the entire transcript by Summers.
Summers continues: "But if it is not at all clear that there is any kind of iron law of capitalism that leads to rising wealth and income inequality, the question of how to account for rising inequality remains. ..... So why has the labor income of the top 1 percent risen so sharply relative to the income of everyone else? No one really knows."
Brophy was delighted to read that Summers argues that an aging population leads to income equality, most notably in Japan, but here in the USA among baby boomers. Also a drop in housing prices impacts lower and middle income households than the elites.
Looking to the future, Summers' guess is that the main story connecting capital accumulation and inequality will not be Piketty’s tale of amassing fortunes. It will be the devastating consequences of robots, 3-D printing, artificial intelligence, and the like for those who perform routine tasks.
Towards the end of Summers' review, he talks of incentives to encourage bottoms up wealth accumulation. Read him carefully, because he seems to make an argument for investing social security assets under the control of owners, not government. I guess W was right on the social security issue.
Finally Summers asks: Why is Inequality so important? He dismisses envy as a root cause.
other comments by brophy
comments by financial times
comments by solow
comments by krugman
comments by caldwell
Great article by Summers. Worth reading. See below. joe.
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Why We’re in a New Gilded Age,
by Thomas Piketty, translated from the French by Arthur Goldhammer
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Top Dogs
Rock-star economist Thomas Piketty— tough on inequality, soft on elitism
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i have been trying to formulate an idea that is itching me. I see it unfolding rapidly and want to pass it on to my 15 grandchildren. Sakaria's message below begins to touch on it.
It seems clear to me now that all my (our) grandchildren are very smart, for whatever reasons, and they all will earn advanced professional degrees and doctorates, and work at a high skill level. But this is not enough in an information economy. By 2020 it is estimated that Big Data will equal about 35 trillion gigabytes of storage and 15% will be on the cloud. These numbers are meaningless to me, except it somehow means that Big Data is huge; and those who manage to develop the ancillary technical skills to manipulate and use Big Data will have a competitive advantage in the workplace. First, by enabling them to advance their knowledge and skills; and secondly by enabling them to be innovative to affect outcomes and profit for their companies.
Remember that half the jobs that exist in 2025 do not exist today.
I remember my first job out of college. I worked as an operations research mathematician (rocket scientist) at Vitro Laboratories in Silver Springs MD on a project for Admirals Henry Raborn and Hyman Richover for the USNavy. The project was to ascertain whether a nuclear weapon system was feasible aboard submarines. I was low man on the totem pole assisting some very serious scientists. Our team demonstrated the feasibility of the idea and hency our nuclear subs. I worked on the force of coriolis. My real job was to learn to make coffee, and also how to program the incipient IBM computers with 4K of memorry in 1957 to perform calculations and summarize data. Learning to write a program and execute it was the most important ancillary skill i had ever developed; and I maintained the skill. I used it thoughout my entire business career all the way to the top of my company. I recently finished writing a program to solve Sudoku.
I want my grandchildren to learn to code computers and laptops, and to write and work macro-languages, as an ancillary skill, to get the most out of the application tools available to them through their various keyboards. I want them to be fearless in attacking Big Data that is available to them in the workplace.
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Editor’s Exit at The Times Puts Tensions on Display
this is a great balanced article by a colleague of jill the shill. jill is an incompetent and inconsiderate manager who is totally into herself. go to charlierose.com and search his site for interviews with jill. an obnoxius, self absorbed incompetent manager who has hurt the nytimes greviously.
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Sea Level Rise and the Future ofs the Netherlands
[related article] Western Antarctic ice sheet collapse has already begun, scientists warn
This possible event has been under study for decades and has a 20,000 year cyclical history. It has nothing to do with anthropogenic global warming (man made). The collapse would take a 1000 years, and the threat of a collapse could be a GOOD THING. MORE ON THIS LATER.
The availability of fresh water is a more serious issue than global warming; but the two issues are connected.
You must add the word polder to your vocuabulary to begin to understand the issues.
Carole and I just spent a week in the Netherlands. The average 12 dutch child knows more about weather, climate change and hydraulics than the typical politically correct climatologist and PhD in the USA. i will add to the understanding of this article in a few days.
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Western Antarctic ice sheet collapse has already begun, scientists warn
This possible event has been under study for decades and has a 20,000 year cyclical history. It has nothing to do with anthropogenic global warming (man made). The collapse would take a 1000 years, and the threat of a collapse could be a GOOD THING. MORE ON THIS LATER.
The availability of fresh water is a more serious issue than global warming; but the two issues are connected.
You must add the word polder to your vocuabulary to begin to understand the issues.
Carole and I just spent a week in the Netherlands. The average 12 dutch child knows more about weather, climate change and hydraulics than the typical politically correct climatologist and PhD in the USA. i will add to the understanding of this article in a few days.
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i do not watch oreilly either; but found this: on-the-target-message, perchance surfing youtube;
as a lifelong conservative democrat - i belive the liberals, particularly in hollywood, have failed us.
Average Americans Think They're Smarter Than the Average American
What does that mean for the country as a whole?
Herein lies the problem
Most people think that politicians are dopes; (and most are dopes; particualry the liberal class politicians)
So most folks figure they are smarter than the pols,
I agree. most folk are.
LOOK WHAT HAPPENED TO JILL ABRAHAMSON, EDITOR OF NYTIMES: she got fired for asking for equal pay.
SO SHE IS JOINING THE REPUBLICAN PARTY
SO FOR THE LIBERAL SUPREME COURT JUDGE, (forgeot his name). HE GOT MUGGED IN WASHINGTON, AND BECAME A CONSERVATIVE.
Forget being smarter than a fifth-grader. Most Americans think they're smarter than everyone else in the country.
Fifty-five percent of Americans think that they are smarter than the average American, according to a new survey by YouGov, a research organization that uses online polling. In other words, as YouGov cleverly points out, the average American thinks that he or she is smarter than the average American.
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