Capital in the Twenty-First Century

Capital in the Twenty-First Century by Thomas Piketty, translated by Arthur Goldhammer

I found this book much better than Piketty's Equality. Here he provides much more convincing analysis and thought on the concept of capital and his proposed fixes to the existing system. He is quite observant of the flaws in the current system as well as challenges of implementing changes. The communist system failed because the elimination of capitalism resulted in the loss of signals in the market. His proposal is to still allow wealth and accumulation, but to tax it in order to prevent excess. There is some detailed analysis of capital's use and flows. Those with little or no capital have difficulty accumulating more, while those with greater amounts can expect greater returns. Most places have a "wealth tax" that only applies to owned property. He would like to expand it to all types of capital. He wants this to global in order to reduce the incidence of scofflaws. There will be other challenges. What if wealth is entirely tied up in illiquid assets with inflated values? Will this further retard the accumulation of wealth, as only those with the means can manage the overhead of the tax and ways to avoid it? 

The wealth tax is the conclusion to the book. However, there is plenty of discussion of experience with capital historically. War and inflation has wiped out savings many times in history. Governments have also come in and taken it away. The levels of accumulation now are some the greatest of all time. Will it last? The description and arguments are well thought out. He continually points out that many of the proposals should be made politically rather than by economists. The discussions are good, even if the final proposal has some flaws. His experience as a Frenchman who had some training in the United States provides a unique perspective.

A Brief History of Equality

A Brief History of Equality by Thomas Piketty, translated by Steven Rendall

Piketty sees the world as moving towards a state of more equality, using the definition he gives. The argument is filled with contradictions and redefinitions. There are various ideas that make sense, but are not carried out well. Including negative externalities in calculation of wealth seems like a smart move, but it becomes challenging in practice. Equality across different groups seems like a noble goal, but how far do you go in defining groups. Is equality a good thing? There is conflict between equality and freedom. People are richer with more material possessions, but are they happier? If what matters is relative difference, wouldn't equality just make everyone feel "blah"? The author is an advocate of reparations. Would these benefit the people paying or the people receiving? He gives the example of "reversing" the suffering of Haiti by returning payments made to France. Would you also make Russia pay back payments made by Finland? What about Germany's payments after World War I? Making payments can encourage thrift and hard work. Receiving payments can end up causing harm and hurting the economy. (Even in rich economies, natural resource abundance can have negative impacts. Would loads of cash in previously disadvantaged groups result in short term boost of "others" and along term negative for the community impacted? You don't often hear of dynasties started with lottery winnings.) 

The author also criticizes the conservatism and slow change of current institutions. A drastic change would be a preferred way to launch communism. Alas, the track record of this has not been good. If we enable more dramatic changes, what is to say it would happen to the left? Trump is an example of taking power to change in the opposite direction.

Cause and effect are also uncertain. Does equality lead to economic growth? Or does growth provide the ability to provide more societal benefits for all? What is the end goal for growth and equality?