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Billy_T.
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February 14, 2020 at 8:34 am #111310
znModeratorBernie Sanders will be good for American economy, top economist says after Goldman Sachs attack
Thomas Piketty says that history has many examples of extreme inequality fostering healthy social democraciesBernie Sanders’ economic policies would be good for the American economy, according to a new book by a renowned economist.
French economist Thomas Piketty said history has many examples of extreme inequality fostering healthy social democracies. His comments come days after a former Goldman Sachs chief executive, Lloyd Blankfein, said on Twitter that Sanders would “ruin our economy.”
In an interview with Bloomberg, Piketty cited Sweden as an example. At the start of the 20th century, Sweden — now held up as an egalitarian country — was entirely controlled by wealthy elites and voting rights were determined by property. Within a very short space of time, and with little economic disruption, it became the social democratic nation that we now know.
This precedent bodes well for Mr Sanders’ policy goals of reforming American capitalism, Piketty suggested.
The Sanders campaign has promised systemic change through economic policy to tackle inequality — higher taxes of the rich, a wealth tax, a minimum wage, and “workplace democracy”.
Piketty, like Mr Sanders, advocates a progressive tax on wealth. “Remember that the US is actually the country that invented progressive taxation of income and wealth in the 20th century,” he said.
Citing 30 years of data showing that US workers have not seen any real per capita growth in that period, Piketty also said no country has a national determinism about economics and the US is not necessarily wed to its current system. Things can change very quickly.
“Warren and Sanders are not radicals, they are moderate social democrats by European standards … and the ideology of the US is changing,” he said.
Piketty’s first book, 2014’s best-selling Capital in the Twenty-First Century, is said to have foreseen the Trump presidency — predicting that voters who felt marginalised by globalisation would turn to radical solutions outside of the realms of traditional politics.
Could there be parallels in support for the Sanders campaign? A portion of the electorate that again feels left behind in a highly unequal society, who could turn away from “business as usual” solutions, and wants real structural change.
In a discussion with the Financial Times, Piketty described the two different policy reactions to this scenario — the first wants to regulate the movement of goods and people, the other wants to regulate the movement of capital. One focuses on external factors (immigrants, unfair trade deals), the other on internal factors (inequality, education, health) advocating structural change at home.
At this early stage of the primary campaign it is still unclear whether the American voter will opt for the latter, and embrace Mr Sanders.
February 14, 2020 at 10:40 am #111311
Billy_TParticipantPicketty is correct.
Don’t know if he mentions this in his new book, but I’m guessing he does . . . it’s also the case that rich people are a drag on any economy. They take money out of the flow in the very act of concentrating it.
To me, this is just common sense and math. I’d bet 99% of the businesses out there would much rather have 10,000 customers with a combined tally of X dollars to spend, than just one, or ten, or a thousand.
Again, it’s common sense. Rich people might buy the most expensive TV, car, house, etc. etc. . . . but chances are they’re buying one of each, maybe two? Ten thousand consumers with the same amount of disposable income combined make X times more economic transactions. It’s literally the difference between one TV sold versus thousands.
Under capitalism, consumerism reigns. Of course, that’s terrible for the environment. But if we’re just talking about a “good economy,” the less inequality the better it does. And the history of economic downturns shows the other side of that coin: the more unequal a society gets, the more likely it is to have economic contractions. The more money is concentrated in fewer hands, the fewer overall transactions occur, which leads to reductions in production, then jobs, then the vicious downward cycle, etc.
There is no greater “stimulus” to a capitalist economy than widespread income gains by the masses. Among the biggest drains is concentration of income and wealth.
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