Tyler Cowen reviews Tom Piketty -
At the core of Piketty’s story are the tragic consequences of capitalism’s success: peace and a declining population bring notable gains, but they also create a society dominated by wealth and by income from capital. In essence, Piketty presents a novel and somewhat disconcerting way of thinking about how hard it is to avoid growing inequality.
Yet there are flaws in this tale. Although r > g is an elegant and compelling explanation for the persistence and growth of inequality, Piketty is not completely clear on what he means by the rate of return on capital. As Piketty readily admits, there is no single rate of return that everyone enjoys. Sitting on short-term U.S. Treasury bills does not yield much: a bit over one percent historically in inflation-adjusted terms and, at the moment, negative real returns. Equity investments such as stocks, on the other hand, have a historical rate of return of about seven percent. In other words, it is risk taking — a concept mostly missing from this book — that pays off.
That fact complicates Piketty’s argument. Piketty estimates that the general annual rate of return on capital has averaged between four and five percent (pretax) and is unlikely to deviate too far from this range. But in too many parts of his argument, he seems to assume that investors can reap such returns automatically, with the mere passage of time, rather than as the result of strategic risk taking. A more accurate picture of the rate of return would incorporate risk and take into account the fact that although the stock of capital typically grows each year, sudden reversals and retrenchments are inevitable. Piketty repeatedly serves up the appropriate qualifications and caveats about his model, but his analysis and policy recommendations nevertheless reflect a notion of capital as a growing, homogeneous blob which, at least under peaceful conditions, ends up overshadowing other economic variables.
Furthermore, even if one overlooks Piketty’s hazy definition of the rate of return, it is difficult to share his confidence that the rate, however one defines it, is likely to be higher than the growth rate of the economy. Normally, economists think of the rate of return on capital as diminishing as investors accumulate more capital, since the most profitable investment opportunities are taken first. But in Piketty’s model, lucrative overseas investments and the growing financial sophistication of the superwealthy keep capital returns permanently high. The more prosaic reality is that most capital stays in its home country and also has a hard time beating randomly selected stocks. For those reasons, the future of capital income looks far less glamorous than Piketty argues.
Blood Moon over Mt. Hood
Pietasters at the DC Brau brewery last night
I’m opposed to the notion of official ideology — not just fascism, Communism and Baathism, but the fluffier ones, too, like ‘multiculturalism’ and ‘climate change’ and ‘marriage equality’. Because the more topics you rule out of discussion — immigration, Islam, ‘gender fluidity’ — the more you delegitimise the political system. As your cynical political consultant sees it, a commitment to abolish Section 18C is more trouble than it’s worth: you’ll just spends weeks getting damned as cobwebbed racists seeking to impose a bigots’ charter when you could be moving the meter with swing voters by announcing a federal programmne of transgendered bathroom construction. But, beyond the shrunken horizons of spinmeisters, the inability to roll back something like 18C says something profound about where we’re headed: a world where real, primal, universal rights — like freedom of expression — come a distant second to the new tribalism of identity-group rights.
… As it happens, the biggest ‘safe space’ on the planet is the Muslim world. For a millennium, Islamic scholars have insisted, as firmly as a climate scientist or an American sophomore, that there’s nothing to debate. And what happened? As the United Nations Human Development Programme’s famous 2002 report blandly noted, more books are translated in Spain in a single year than have been translated into Arabic in the last 1,000 years. Free speech and a dynamic, innovative society are intimately connected: a culture that can’t bear a dissenting word on race or religion or gender fluidity or carbon offsets is a society that will cease to innovate, and then stagnate, and then decline, very fast.
As American universities, British playwrights and Australian judges once understood, the ‘safe space’ is where cultures go to die. — Mark Steyn
We have tested and tasted too much, lover-
Through a chink too wide there comes in no wonder.
But here in the Advent-darkened room
Where the dry black bread and the sugarless tea
Of penance will charm back the luxury
Of a child’s soul, we’ll return to Doom
The knowledge we stole but could not use.
And the newness that was in every stale thing
When we looked at it as children: the spirit-shocking
Wonder in a black slanting Ulster hill
Or the prophetic astonishment in the tedious talking
Of an old fool will awake for us and bring
You and me to the yard gate to watch the whins
And the bog-holes, cart-tracks, old stables where Time begins.
O after Christmas we’ll have no need to go searching
For the difference that sets an old phrase burning-
We’ll hear it in the whispered argument of a churning
Or in the streets where the village boys are lurching.
And we’ll hear it among decent men too
Who barrow dung in gardens under trees,
Wherever life pours ordinary plenty.
Won’t we be rich, my love and I, and
God we shall not ask for reason’s payment,
The why of heart-breaking strangeness in dreeping hedges
Nor analyse God’s breath in common statement.
We have thrown into the dust-bin the clay-minted wages
Of pleasure, knowledge and the conscious hour-
And Christ comes with a January flower.
This February report on Kate Rothschild is really something -
Kate, then 21, was a vision of understated beauty with flowers in her hair as she wed Ben Goldsmith, bringing together two of Britain’s most fabulously wealthy dynasties. He was worth £300 million; his bride a comparatively paltry £18 million.
Now, her marriage destroyed, she spends her life trying to control a wannabe rapper. As Jay’s manager, Kate, 31, has had to fit in with him — swapping designer dresses and jolly lunches for tracksuits and snatched cigarettes outside recording studios.
Meanwhile, Jay, who has a daughter by a previous relationship and a penchant for marijuana and Jack Daniels, has introduced her to life a world away from her comfortable upbringing.
When they go out partying, which is often, Jay likes to make an impression. His reputation is as a man who doesn’t care who he offends — a trait that many blame for his failure thus far to turn talent into record sales.
A smitten Kate, however, feels he can do no wrong. Witness the events of last week, when Jay, 37, (real name Timothy Elpadaro Thedford) demonstrated that while you can take the rapper out of the deprived housing projects of New Orleans, a questionable legacy remains.
To His Excellency, Abraham Lincoln, President of the United States:
Excellent Sir, It becomes my duty as Catholic Bishop of the diocese of Natchez, which comprises the State of Mississippi, to claim Your Excellency’s protection against an attempt of Brigadier General J. M. Tuttle, to interfere with my ecclesiastical administration.
Pardon the length of this communication. I have condensed it as much as I could do, consistently with my obligation of giving you the information, which the importance of the case makes it necessary for you to have.
General Tuttle requires me to read, or direct the priests under my jurisdiction to read, in the public services of the Cathedral Church of Natchez, a certain prayer, which is found in some Catholic prayer-books, for the public authorities, ecclesiastical and civil. He did, indeed, say that he gave me no order, but only a request to read it as a favor to him. But he immediately nullified his own distinction by declaring that, if I did not comply with his requests, he would consider it as a proof of disloyalty, which would be subject to punishment. He further declared his meaning in these words: ‘you are free to read it or not, as you see fit, but if you do not choose, you must take the consequences.’ And in reply to my inquiry, whether he would not before passing a sentence against me, make a specific charge and allow me a hearing on the matter, he said that I might have a trial and I might not. I have not recited the prayer, not directed others to recite it. I have explained to General Tuttle that said prayer is not at all a part of our regular church service, and is not found in the book which contains our service — the Missal; that it has indeed been recited sometimes during the divine services, but only at the free choice of the priest or Bishop, and even with some stretch of his discretionary powers, since the canonical usage of the Church excludes the public recital during Mass of prayer for any person not contained in the Missal; and that in a great many Churches of the United States — I believe the majority of them — it never has been recited publicly.
It has been remarked to General Tuttle by an officer of the United States Army, that this prayer would be especially incongruous at present, because it recommends to the favor of Almighty God both the Government of the United States, and the Governor, Legislature, and civil officers of this State — Mississippi — the declared enemies of the United States. The General says that he wishes it to be read with the self-contradiction ‘just as it is in the book’. I have told him that in Natchez, during the time that I have been here (about seven years), we sometimes read it, sometimes omit it, and sometimes read other prayers in its place; that for a while, I read a similar prayer for the Confederate authorities, but afterwards I laid aside all these prayers of a local character, and conformed more closely to the approved usages of the Church by adopting a prayer, belonging to the authorized Liturgy, the Litany of the Saints. This change was made in November, 1862, long before the United States forces occupied Natchez, and while the Confederate military were in quiet possession of the place. And I have told General Tuttle that if the Confederate authorities had attempted to compel me at that time to resume the reciting of the prayer in their behalf, I should have resisted them as I resist now.
I have the honor to remain with profound respect, Your Excellency’s most humble servant,
William Henry Elder
Bishop of Natchez
The poems of Henry Timrod