Review of “Capital in the 21st Century” by Thomas Piketty


For such a long book (800-odd pages), Thomas Piketty’s Capital in the 21st Century certainly does boil things down to basics.

There are two fundamental laws of capitalism, argues Piketty. One: the rate of return on capital investment (rents, interest, dividends, etc.) will always exceed the overall growth rate of the economy. Even briefer: r > g.

Two: Accumulated wealth is growing faster than annual incomes. This is an innocuous way of saying the rich are getting richer simply by breathing and not necessarily by working harder than everyone else.

capital pikettyThis second law is the really interesting part of the story. Spelled out in a little more detail, it says that the ratio of wealth to incomes is equal to the rate of savings over growth, or β=s/g. According to data Piketty amasses for nine rich countries, the rate of savings has remained relatively constant independent of the growth rate over the last several decades. This was hard to notice in, say, 1950s America, because the growth rate was so high that labor incomes were rising across the board (including, crucially, among the lower class then joining the middle class). Working stiffs didn’t really sit up and take notice of how much money the super-rich had in the banks, because their purchasing power was rising quite merrily and they were buying their own homes at record speed.

This era of high wages, job security, and increased home ownership is a golden age we look back on as a normal state of affairs we would like to regain. But here Piketty throws in a twist. The postwar boom was not normal.

Measured over the decades and centuries, what we are led to think of as low growth (below two percent) is actually normal growth. The boom years in all the world’s developed economies have been sparked by one of two things–a deliberate mobilization of production in response to a crisis (war or depression) or periods in which less-developed economies catch up to technology leaders (think Asian Tigers). The three to four percent growth of such tiger economies are the exception, not the rule. American politicians who say they can lead the country back to “permanent” three percent growth are, according to Piketty’s data, simply ignoring reality.

The problem, if you care about such things, is that, when growth slows to a normal rate, the rich “gain” a much larger share of a nation’s wealth simply by holding on to what they have. If, for example, growth in a country with a savings rate of 10 percent slows from three percent to one percent, the capital ratio (the value of stuff owned versus aggregate annual income) shifts from 333 percent to 1,000 percent! (That exclamation point is not a mathematical operator.)

The deeper problem is–I already implied this, but it bears repeating–low growth is the new normal. It is actually not low growth at all. Although some of Piketty’s data sets are patchy (and he admits this), the long-term numbers are convincing on this issue: most developed economies grow most of the time at about one and a half percent. We should stop calling it low growth.

And here’s the thing about “low” normal growth. When we go back to Piketty’s first law, we see how the inequality of wealth distribution would compound massively in an era of normal growth. Not only would the rich become richer just by sitting and owning a larger share of the nation’s wealth, but they would also continue to enjoy a rate of return on capital investment that outpaces overall growth. The economy might not be going like gangbusters, but capitalists  will still beat the growth rate unless they make a special effort to lose money. The result, which we see unfolding before our eyes, is that the rich will climb the y-axis of the β-chart assymptotically until they own very nearly everything.

The buzz around Piketty’s book when it came out in 2012 was that it revealed him as a “new socialist.” By Fox News standards, I suppose he may be: he does not seem to think we should taunt and slander the poor for their degeneracy. I would have thought, though, that any socialist worth his salt would have made more of the fact that the two laws of capitalism as Piketty draws them roundly refute the idea of trickle-down and the invisible hand. Quite the opposite, in fact; no matter how much the rich already have, or how fast the economy is growing, they do not sprinkle gold coins more freely on the poor; indeed they hold on at precisely the same rate as in lean times to their stores of riches. One of Piketty’s less remarked-upon points is that there is too much idle capital in the world. Although tycoons are credited axiomatically as “job creators,” they actually do much less than they could to vivify the job market.

I must admit I anticipated a long slog when I started to read Piketty, something like Stendahl with formulas. There are formulas, of course, but Piketty is wonderful at explaining them. The surprising thing is how fluidly the whole book reads. With only one exception, each chapter presents a digestible quantity of concepts, vlaues and data, with a clear overarching story to tell.

One of the recurring treats of the book is Piketty’s descriptions of “orders of magnitude,” or rough figures that give you the parameters of a curious phenomenon. One of the more memorable of these is how closely our pattern of wealth dsitribution today resembles what it was in England in the heyday of colonialism. In America, the richest 10 percent of the country owns 70 percent of the wealth. The “middle” 45 percent owns 25 percent, and the bottom 55 percent owns almost nothing. They have only the clothes they stand up in, as Orwell once put it. The Victorian English pulled off these numbers by extracting lots of wealth from other countries, in the form of oil, tea, rubber and so forth. Piketty leaves unspoken the observation that our American robber barons, lacking colonies, must have won their 70 percent pie by fleecing peasants and fracking  landscapes much closer to home.

Piketty is also keen to point out surprises or patterns that seem to contradict his main ideas. For example, it is only the super-rich who out-earn the rest of us by simply sitting back and letting the dividends roll in. What has become much more common–specially since the deregulation of financial markets in the 1980s and 90s–is for the moderately super rich (funds managers and CEOs most of them) to out-earn us mere mortals through labor income. If you are a skilled, assiduous technology worker you might be sitting pretty on $150,000 a year of labor income. Not bad, but you lag pathetically far behind a hedge fund manager earning a million dollars a year plus several more million more in bonuses. People, of course, notice this kind of thing. In a phrase I will long recall for its primness of understatement, Piketty muses whether there is indeed such a “discontinuity of marginal labor value” between workers as the income gap between tech worker and fund manager suggests. One wishes Upton Sinclair were alive today to appreciate this phrase.

What to do about the runaway concentration of capital wealth? Sit back and wait for global class warfare? It need not come to that. Most developed economies already have robust graduated tax schedules, which means the wealthy are taxed at higher rates than the poor, on their income. This is a good start, but it obviously has not solved the problem of the über-concentration of capital. What is needed, Piketty argues in the last chapter of Capital, is a graduated tax on capital itself. We already have this, of course, in the form of real estate property tax. The idea would be to expand this tax to cover all kinds of capital holdings. It would ipso facto redistribute some of that 70 percent that the owning-class owns to the toiling classes and–as a friend of mine pointed out–would potentially knock loose some of the super-riches’ idle capital for use in dynamic, job-creating investments–the invisible hand, forced to do its job.

Piketty is not naive, of course. He does not see a clear path to achieving the goal of a capital tax. If we were to take the first step, though, we would have to insist on the enforcement of wealth-reporting laws that today go mocked and ignored thanks to the existence of offshore tax havens. The super rich help themselves to the legal and regulatory protections of an advanced market economy but, in an act of breathtaking hubris and hypocrisy, move their winnings outside the reach of the system that fattened them in the first place. Where I come from, it is perfectly fine to play to win, but a game is not a game if it has no binding rules. Tax havens corrode capitalism at its foundation by saying the rules only apply when the super rish want them to. (And, it is worth bearing in mind that it is the hypocrisy of the ruling class, not necessarily their wealth, that sparks violent revolution.)

Another friend of mine pointed out that Piketty is too Cartesian to be entirely convincing: he plots his graphs and pronounces his clear and distinct ideas, not quite allowing for the empirical messiness of the real world. I think the most worrisome point in this area is Piketty’s idea for the tax on capital. It would be forgiveable for Piketty to have erred slightly somewhere in his analysis of historical phenomena. A curve, after all, is known to idealize an arcing cluster of messy data points. But to trust his recommendation of such a robust intervention as a capital tax might prove foolhardy. A tax on capital is indeed an elegant, Cartesian solution to the problem at hand, but “elegant” in mathematics usually means the formula ignores conflicting realities. To Piketty’s credit, though, throughout his book he marks off many of the potential hazards and weaknesses in his theories. Read him for a bracing, intellectually honest appraisal of who owns how much and what it all means. And even if you don’t turn the last page cheering viva la revolucion, surely we can agree to do something about those fucking tax havens.


Journalists, Journalism and “Fake News”


Like my hero Christopher Hitchens, I have a thing for journalists. They get shamefully little credit for their efforts to elevate and improve public discourse, at least in America. This may be because great journalists’ deeper insights often come in book form, and, as Gore Vidal points out, only five percent of our republic reads books. Our illiteracy is a pity. We won’t even be so creative as to fiddle as our Rome burns; we will simply fidget spin in front of our streaming video devices.

But today my argument is not so glum as that. I’m not here to weep at America’s decline but to praise great men who have tried to stave it off by writing in newspapers about the forces abroad in the world.

Before I start clearing the room with pieties, though, you might well ask, why now–why cheer for good journalism on this day rather than any other? John Stuart Mill wrote as long ago as 1859, “The time, it is to be hoped, is gone by, when any defence would be necessary of the ‘liberty of the press’ as one of the securities against corrupt or tyrannical government.”

But history’s pendulum continues to swing, and it seems the press is once again in need of some defending. A large minority of our populace has recently moved beyond passively ignoring the work of journalists to actively militating against them, tarring them as “enemies of the people” and calling their reports “fake news.”  It’s a rousing chorus–makes one feel part of the Volk.

A few months ago I blogged (very unoriginally) that we were coming to resemble the America of Mike Judge’s Idiocracy. Our open hostility to journalism takes us another step in this direction. We are not just contesting journalists’ ability to find and interpret particular facts; we are rebelling against their purpose and tone. By what right do they go on as if they know things? They clearly think they’re better than us.

Whenever Idiocracy‘s (modestly intelligent) hero deploys a complete sentence to express a clear thought, his fellows discredit him for “talking like a fag.” You can enjoy this jolly form of abuse here and here. If it appeals to you, you’re in for a real treat: our new, open war on journalism proceeds on the same ethos as does the insuprable cretinism of Idiocracy‘s braying class. You simply hoot louder than anyone who bothers to form a sentence. If you haven’t tried it, you don’t know what a winning formula feels like. Richard Hofstadter may have worried as far back as 1963 that anti-intellectualism was taking over American public life; I can only guess his head might explode today at the high artistic form it has achieved on the strength of Cheetos, energy drinks, and reality TV.

Before I present my case for respectable journalism, I would like to make it clear that I have no intention of setting up a fair fight. My purpose is to extol a handful of magnificent journalists and let their light expose the dark fraud of the “fake news” slur. I do not intend to referee the perfectly valid claims to be made against journalism that is rigged by special interests, deceptive, or just plain bad. That contest is its own topic. The only point I wish to make today is that the whole ship is not going down. Indeed it is buoyed up by some of the best journalists in American history.

For me, the marks of excellent journalism are excellent writing and breadth of imagination. I am captivated by the kind of journalist whose compulsion to observe the human condition overflows into (and sometimes has roots in) different kinds of writing, especially literture. Hitchens begins an impressive list of such writers in the essay I linked to above. Stung by a professor who denigrates a particular author’s style as “journalistic,” Hitchens recalls great literary artists who were also journalists:

Émile Zola – a journalist. Charles Dickens – a journalist. Thomas Paine – another journalist. Mark Twain. Rudyard Kipling. George Orwell – a journalist par excellence. Somewhere in my cortex was the idea to which Orwell himself once gave explicit shape: the idea that “mere” writing of this sort could aspire to become an art, and that the word “journalist” – like the ironic modern English usage of the word “hack” – could lose its association with the trivial and the evanescent.


Without going on too long, I could add some of my favorite writers to Hitchens’ list. Walt Whitman comes first to mind, a New York journalist. He called America the greatest poem, but he wrote of his country not just in verse but in fine, searching prose as well. Read Whitman’s Democratic Vistas and judge for yourself whether he accomplished anything less than the portrayal of the whole, clamorous American persona, caught between slavery and freedom. James Baldwin, possibly America’s greatest pure essayist, certainly one if its finest 20th-century novelists, kept body and soul together by writing film reviews for newspapers. Steven Jay Gould might have remained “just” an accomplished paleontologist had he not more or less invented the category of the science journalist in the late 20th century. He dedicated his best writing to the proposition that America’s political imagination should be informed by science.

At this juncture in our history, three journalists stand out to me as giants. You may dispute their perspective; you may reject their conclusions; you may weigh their work lightly against your own heroes’; but it is hard to read them and come away without the impression that they invest their lifeblood in writing the truth as they see it. They are beacons shining a light on America and what it means.

George Packer is possibly the most insightful, generous voice in American journalism today; he almost certainly has the most copious vision. His masterpiece (so far), The Unwinding, tells the story of how America’s sturdiest institutions since FDR began to dissolve in the 1970s, eventually hollowing out the American dream and ceding the government’s power to organized money.  Although Packer strikes deeply conservative notes when he reflects on what we’ve lost–a congress that actually debates, an economy that produces useable things rather than tradeable paper, laws that bar banks from wheeling and dealing with your money in the stratosphere of risk–he writes with a progressive’s conviction that our salvation lies in a future reimagined, not in a past reclaimed.

To get an idea of Packer’s formidable range, see his New Yorker articles on the U.S. Senate, American influence in Burma, Muslim alienation in France, and the astonishing rise of Angela Merkel. Everything Packer writes will enhance your sense of what it means to be American or your understanding of America’s fit with the rest of the world.

A comet of a journalist, Ta Nehisi Coates is a modern-day prophet of African-American liberation, heir to James Baldwin. His lyrical voice and unsparing analysis make him the gadfly that won’t let America stand undisturbed in its moral self-image. As long as we fail to speak honestly of white supremacy, the original sin of our republic’s founding, Coates is there, prodding us with uncomfortable reminders that slavery’s heritage is still alive. Almost all Americans want to move on and not be dragged down by the past, generally a healthy attitude. In a landmark 2014 article, though, which I believe will stand out for a hundred years in American letters, matching Emerson, MLK, and James Baldwin at their best, Coates makes a devasting case that white America’s desire to move on masks a dark refusal to come clean about never having stopped repressing blacks. Despite its massive bloodshed, the Civil War proved only to be a comma in our history, not a period.

Coates’ 2014 article argues that the history of black-white relations since the War has been one of stealthily extending the denouement of the Civil War by repressive means other than slavery. The fact that Coates is not original in his message bears stunning testimony to the power of his writing. Coates lives and writes, I believe, to persuade America that it has a white problem, not a black problem–the same incendiary idea James Baldwin birthed. But if anything, Coates is a more agile writer than Baldwin. Where Baldwin kept himself at a literary remove from particular facts of sociology, economics, and policy, Coates uncovers them through methodical investigative journalism and weaves them directly into his writing. The acid test of reading Coates is to ask yourself, is he addressing a black audience or an all-American one? If you think he’s writing for a “special interest” group–a message you might conceivably take away from the title of his 2017 “My President Was Black“–you’re missing the point. Coates tells the story of America, and it is still one of tragedy, hypocrisy and unfulfilled promise.

Bob Woodward is the gray eminence of American journalism, and deservedly so. He gained fame by breaking Watergate and has never stopped using his pen to hold governing elites to account. Woodward has such a way of telling things the way they are and letting the audience draw their own conclusions that Christopher Hitchens once called him a mere scribe to the rich and powerful. Hitch got Woodward wrong, though.

Over the years, Woodward patiently built up two capabilities that would set him head and shoulders above other Washington reporters. First, he established such a large body of factual reportage in his early years as to blend in with the consensus-builders of Washington’s “loyal” corps of political reporters. So when he rose up to take down his first giant–Nixon–Woodward could in no way be accused of anti-establishment radicalism. He was part of the establishment. This is a large part of Woodward’s power.

The other part is his method. How does Woodward routinely gain access to the country’s most powerful decisionmakers and persuade them to speak openly? He uses a kind of political judo. Each time Woodward prepares a book on a presidential administration or a center of government power, he invites the principal camp to be extensively interviewed, with the tacit assurance that he will talk at the same length with their opponents. The incentive to have one’s case clearly on the record is highly motivating if the option is to leave one’s critics to tell the whole story. The Woodward method is not glamorous, but it provides a stately reminder that journalism still works; done well, it can compel the most powerful officials in the land to tell the uncomfortable truth about their acts and decisions.


Think of your own favorite journalists. Chances are, they excel at one of their profession’s three core missions–holding the powerful to account, improving informed democracy, or broadening the reader’s moral imagination. For me, Woodward towers above his peers in the first cause, Coates and Packer in the second and third. We are a better country for them.

Tyranny Lite


In her short book On Violence, the philosopher Hannah Arendt observes that the signal feature of a tyrant is his refusal to be held accountable. The tyrant does what he wants, and his subjects have no recourse to question his choices.

Several months ago, I accused the newly elected president of showing early signs of fascism. Although I meant what I said, I hoped soon after writing the post that I was merely having an overheated reaction to the ugly Nazi rally that Richard Spencer had recently led in support of Trump.

Well, events will prove or disprove Trump’s fascist credentials. The signs today indicate he is overfriendly with fascist creeps but, perhaps for tactical reasons, stops short of openly endorsing them.

What is crystal clear though–and has been since before the presidential campaign–is that Trump is a committed tyrant. Thank goodness he is not yet an accomplished one, but he has made it palpably evident that he intends to govern without accountability.

Consider his main rule of conduct: never admit error. This is as plain a principle for avoiding accountability as can be formulated. As an individual, this attitude would merely qualify you as an irremediable clod, but as president, it has further-reaching political consequences. A president who refuses to admit mistakes places his actions outside the scope of democratic checks.

When federal courts rejected Trump’s travel ban in February, he did not enagage those judgments based on the comparative merits of his case; rather, he denigrated the court’s competency even to review his decisions. This move came naturally to a president who is allergic to admitting error. If Trump made no mistake, there was no authority equal to calling him out.

Then there is Trump’s follow-on rule: never apologize. This is a deeply anti-social corallory to Rule Number One, generally observed in bullies who are shunned into reclusiveness. It is also a defining trait of tyrants. Did Mao apologize for the tens of millions killed in the Great Leap Forward? Not a peep. Indeed it is ridiculous to expect of tyrants the sincere self-reflection required for atonement-seeking. They are unrepentant titans of history.

Trump Media

Perhaps Trump’s most naked rejection of accountability has been his declaration of war on the press. Despite its partisan flaws, the press still exists to hold the powerful to account. Trump hates this, and to stifle criticism, he has resorted to the churlish logical fallacy of poisoning the well, calling the press “very dishonest” and even “enemies of the people.” In a charmingly historical grace note to this attitude, Trump’s fascist supporters at the August torchlight march in Charlottesville invoked Hitler’s version of the “fake news” tagline, calling the media the lügende Presse. No doubt Trump liked that.

Trump’s attacks on the press have led him to redefine any outlets he doesn’t like as the “mainstream liberal media,” betraying a garish ignorance of the press’s landscape and history. While many press outlets that are critical of Trump would happily accept the liberal label–for example, The Nation, Harpers, Mother Jones–some of the most critical are either diehard rightwing platforms (like The Weekly Standard), libertarian (Reason), or historically critical toward presidents of both parties (the New York Times and Washington Post). My favorite case is the Atlantic Monthly, which has literally reoriented its editorial line to resist Trump’s demented attacks on truth and dignity. Based on its intellectual heritage, the Atlantic is a quintessentially Republican newspaper, founded by the GOP’s earliest fellow travelers, and in support of their defining policy goal of abolitionism. But even a founding GOP publication is all liberal lies in TrumpWorld.

Then there is the matter of Trump’s tax returns. Strictly speaking, Trump could frame his refusal to disclose them as a protection of his individual privacy before he became a candidate for president. Although he hasn’t articulated a coherent case for his reticence, he seems to point in this general direction, claiming his taxes wouldn’t be “interesting” to the public.

But there is a reason that all recent presidents have disclosed their tax returns, and it has everything to do with accountability. As the highest political leader in the land, the president should not just conform to the minimum requirements of transparency and accountabililty, but should make himself a model of those values. Trump’s steadfast refusal to follow precedent gives the appearance he has something to hide.

Well, Trump cannot hide his affinity for tyranny. The truth, as Orwell liked to say, is right in front of our noses: Trump scornfully rejects the very idea of accountbility. He wishes with all his political instinct to be a tyrant. So far, our free society and democratic insitutions have limited his ability to follow through, but we should do better than just wait and see how things shake out. Remember, the vote is another form of democratic check on Trump’s power; if it goes against him, he is likely to invoke Rule Number One and claim the “dishonest, paid-off” voters have no claim against his legitimacy.

Review of “A Clergyman’s Daughter” by George Orwell


Nineteen Eighty Four opens as the clocks in Oceania’s capital are striking thirteen. Winston Smith putters and cows in his shabby apartment. The pealing of the bells penetrates Smith’s skull; there is no private space there. Big Brother is everywhere.

In A Clergyman’s Daughter, which Orwell wrote 14 years before 1984, the heroine, Dorothy Hare awakes in the cold, predawn dark to the sound of  a different bell–an alarm clock ringing in the latest day in her totalitarian nightmare. But Dorothy’s hell is more personal than Winston Smith’s. Dorothy is enslaved to the whims and demands of her misanthropic father, the clergyman of the book’s title. We come to despise Rector Hare within a few short paragraphs.  He is dictatorial to Dorothy and cold, snobbish, bullying, stingy, and cruelly insensitve to the world at large. On the morning the story opens, he curtly sends off a young, desperate couple begging to have their dying infant baptized. They are poor, and they interrupted Hare’s breakfast, committing the unforgiveable class sin of uppitiness.

clergymans-daughter1Like Big Brother, and all really good dictators, Rector Hare needs no violent force to exert control. Dorothy has done the job for him by adopting his ideology. She is a deeply compulsive Christian; she holds running, prayerful conversations with her Lord, quotes scripture to meet every quotidian “challenge,” and renders up every last question of conscience to the determination of God’s will. She works herself ragged keeping up her father’s church and looking after his parishioners body and soul. Really she is the only thing holding his miserable congregation together. Oh, she also sticks pins in her arms when she senses the slightest hint of impiety in her thoughts.

But one night, spent in the company of the village libertine, Dorothy’s pious world comes crashing down. Driven to the point of psyhological collapse by relentless service to church and father, Dorothy suffers an episode of traumatic amnesia. She finds herself penniless in London, with no sense of who she is. There proceeds a Candide-like train of indignities–homelessness, near-starvation, near-prostitution, near-death-by-exposure and wage slavery–that gradually awakens Dorothy to a sense of her former identity. She is, however, so engrossed in coping with her new, and much more desperate miseries, she does not realize until several weeks have passed that she has utterly lost her faith. How did it happen?

The truth that overwhelms Dorothy during her eight-month long struggle with poverty is that great masses of people on God’s green earth simply lack the mental luxury required for religion. Poverty kills thought, and with it, the impulse to form loylaties to myths about why we are here. We are here to eat, and most of us do too little of it, Dorothy discovers. Ideas that strike the comfortable few as life-enhancing philosophies are pure bunkum, and in fact never even occur, to those who must struggle constantly against hunger, exposure and disease. Although Dorothy does not quite rise to make the explicit observation, “Nice set up, God,” she does experience, in a variety of ways, the stuffing being knocked out of the fairytale of divine benevolence.

In recounting Dorothy’s journey, Orwell gives one of the best descriptions in modern writing of the manner in which faith departs the enlightnened mind. It rarely happens suddenly, by force of argument; it clears up over time. About three quarters through the story, as Dorothy escapes the all-out penury of street life for the mere gnawing insecurity of wage slavery, Orwell observes:

There was never a moment when the power of worship returned to her. Indeed, the whole concept of worship was meaningless to her now; her faith had vanished, utterly and irrevocably. It is a mysterious thing, the loss of faith–as mysterious as faith itself. Like faith, it is ultimately not rooted in logic; it is a change in the climate of the mind.

As a statement, A Clergyman’s Daughter is one of Orwell’s better novels. It puts into potent narrative form the criticism of Christianity Orwell introduces in the essay, “Tolstoy, Lear and the Fool.” There, he says Heaven-seekers are ultimately just shabby hedonists. They avoid the hard work of trying to improve this world–beset with certain loss and constant threats to dignity–for an imagined world in which we are opulently rewarded for being loyal to a solipsistic delusion.

Artistically, however, A Clergyman’s Daughter has weaknesses that are highly characteristic of Orwell’s style before the triumphs of Animal Farm and 1984. He occasionally reverts to the voice of the literary critic, following up a descriptive passage with an explanation of what it means. Even more often in A Clergyman’s Daughter, Orwell pauses telling his story to deliver acute passages of what we would today call immersion journalism. It is clear from Orwell’s descriptions of homeless life that he infiltrated the ranks of the dirt poor (in fact we know he did: that is the setup of Down and Out in Paris and London) to gain first-hand knowledge of their plight, and he looked directly into the sham of England’s unlicensed private schools, which existed only to collect fees and thwart the development of children. Orwell’s asides on these issues are highly revealing, but they remind us that he never allowed himself to come fully into his art until he had something luminescent to say about the human condition.